How does salary sacrifice affect my taxable income?

Salary sacrifice reduces your taxable income by diverting pre-tax dollars into benefits like super or a car. The amount you can sacrifice is limited by the ATO's rules, and it lowers the income on which you pay tax and Medicare levy. For example, if you earn $80,000 and sacrifice $10,000 into super, you're taxed on $70,000. Use the [super and packaging](/topics/super-and-packaging) guide for limits.

What is the maximum I can salary sacrifice into super?

For 2026-27, the concessional contributions cap is $30,000 per year, which includes employer super guarantee (12% of ordinary earnings) and any salary-sacrificed amounts. If your employer pays 12% on $80,000, that's $9,600, leaving you $20,400 to sacrifice. The super guarantee stops at the maximum contribution base of $270,830. See [take-home pay](/topics/take-home) for worked examples.

Does salary sacrifice affect my Medicare levy?

Yes, because the Medicare levy (2% of taxable income) is calculated after salary sacrifice reduces your taxable income. Lower taxable income may also affect your eligibility for the Medicare levy reduction thresholds. The 2025-26 single reduction thresholds apply here. For more, see the [hourly conversion](/topics/hourly-conversion) page.

How Much Can I Salary Sacrifice? Understanding Your Hourly to Annual Pay

For a full-time employee working 38 hours per week, annual gross pay is your hourly rate multiplied by 38 then by 52.

How to Convert Your Hourly Rate to Annual Pay

To work out your annual gross pay, multiply your hourly rate by the number of hours you work each week, then by 52 weeks. This article assumes a standard full-time week of 38 hours, as set by the Fair Work Ombudsman. For example, if you earn $30 per hour:

$30 × 38 hours × 52 weeks = $59,280 per year.

If you work different hours, adjust the weekly figure. The formula is the same for part-time or casual workers, but casual employees usually receive a 25% loading on top of the base rate. The casual loading page explains how to include it.

National Minimum Wage and Award Rates

From 1 July 2026, the National Minimum Wage is $26.44 per hour, or $1,004.90 per week for 38 hours. Casual employees get $33.05 per hour including the 25% loading. Many industries have award rates that are higher than the minimum. The Fair Work Commission sets these rates. Use the minimum wage page to compare.

Fortnightly Pay

If you are paid fortnightly, multiply your weekly pay by 2. For the $30/hour example, weekly pay is $1,140, so fortnightly is $2,280. This helps when budgeting between pay cycles.

Tax and Medicare on Your Annual Pay

Once you have your annual gross figure, you can estimate how much tax and Medicare levy you will owe. The Australian Taxation Office uses the 2026-27 resident tax rates:

Nil on the first $18,200
15% on amounts from $18,201 to $45,000
30% on amounts from $45,001 to $135,000
37% on amounts from $135,001 to $190,000
45% on amounts above $190,000

Plus the Medicare levy of 2% of taxable income. The Medicare levy reduction thresholds for singles in 2025-26 apply here (the 2026-27 thresholds were not confirmed).

For a $59,280 annual income, the tax is:

Tax on $18,201 to $45,000: ($45,000 - $18,200) × 15% = $4,020
Tax on $45,001 to $59,280: ($59,280 - $45,000) × 30% = $4,284
Total tax = $8,304
Medicare levy = $59,280 × 2% = $1,185.60
Total deductions = $9,489.60

Your take-home pay would be about $49,790.40 per year.

How Much Can I Salary Sacrifice?

Salary sacrifice allows you to reduce your taxable income by directing part of your pre-tax pay into benefits such as additional superannuation, a car, or other approved items. The question "how much can i salary sacrifice" depends on your income and the caps set by the ATO. For super, the concessional contributions cap is $30,000 per year (including employer super guarantee). If your employer pays 12% on your ordinary earnings, that counts towards the cap. For example, on $59,280, the super guarantee is $7,113.60, leaving $22,886.40 you could sacrifice into super. Salary sacrifice reduces your taxable income, which lowers your tax and Medicare levy. See the super and packaging page for more details.

Super Guarantee and Superannuation

Super guarantee is 12% of your ordinary earnings, paid on top of your gross pay. The maximum contribution base is $270,830. Super is not deducted from your pay; it goes into a fund for your retirement. The average pay page shows average weekly earnings from the Australian Bureau of Statistics (May 2026): full-time adult ordinary time $2,083.70 per week.

Important Notes

This estimate assumes the same rate every week, no unpaid overtime, no penalty rates, no allowances, and no salary sacrifice. Tax is estimated using the 2026-27 resident scale with the full tax-free threshold. Medicare uses the 2025-26 single reduction thresholds because the 2026-27 reduction thresholds were not confirmed. HELP, the Medicare levy surcharge, and salary packaging are not deducted. This is an estimate, not a determination of your pay or tax.

For more detailed calculations, use the timesheet to enter your own hourly rate and optionally add casual loading. Do not enter a rate that already includes casual loading. The timesheet is the home page. Use the reference tables for tables.