What is salary sacrificing into super?

Salary sacrificing into super is an arrangement where you and your employer agree to put part of your pre-tax salary into your super fund instead of paying it to you as cash. This reduces your taxable income, so you pay less income tax. The contributions are taxed in the super fund at 15%, which is generally lower than your marginal tax rate. Importantly, salary sacrifice contributions are additional to your employer's super guarantee – your employer must still pay the full 12% super guarantee on your ordinary earnings as if no sacrifice existed.

How does salary sacrificing into super affect my take-home pay?

Salary sacrificing reduces your assessable income, so less tax is withheld from your pay. Your take-home pay will be lower because the sacrificed amount goes to super, but you may end up with more after-tax wealth overall. The trade-off is that you cannot access that money until retirement. Use our [take-home pay](/topics/take-home) page to see how different sacrifice amounts affect your net pay. Remember that the concessional contributions cap (including your employer's super guarantee) limits how much you can sacrifice tax-effectively – for 2026–27 the cap is $32,500 per year.

Can I salary sacrifice into super if I earn the National Minimum Wage?

Yes, you can salary sacrifice into super on any wage, but it is usually more beneficial for people on middle to high incomes because their marginal tax rate is higher. If you earn the National Minimum Wage of $26.44 per hour (or $33.05 casual), your marginal tax rate is 15% (plus 2% Medicare levy) once you earn over $18,200. Salary sacrificing would still save you tax, but the benefit is smaller. Check your award or agreement – some awards have extra super terms. For more details, see our [minimum wage](/topics/minimum-wage) page.

Salary Sacrificing into Super: Convert Your Hourly Rate to Annual Pay with a 38-Hour Week

Based on a 38-hour week, your annual gross pay is your hourly rate multiplied by 1,976 hours (38 hours × 52 weeks).

How to Convert Your Hourly Rate to Annual Pay

To estimate your annual gross pay, multiply your hourly rate by the number of hours you work each week, then multiply by 52 weeks. This calculator assumes a standard 38-hour week, so the formula is:

Annual gross ≈ hourly rate × 38 hours × 52 weeks

That gives you 1,976 hours per year. For example, at the National Minimum Wage of $26.44 per hour, annual gross pay is about $52,245 (before tax and super). If you work fewer or more hours, adjust the weekly hours accordingly.

The Fortnight and Weekly Pay

Your weekly pay is simply your hourly rate × hours per week. A fortnight is twice that. For a 38-hour week at $26.44, weekly pay is $1,004.90 and fortnightly pay is $2,009.80. This calculator shows both weekly and fortnightly figures to help you budget.

Distinguishing Minimum Wage, Award Rates, and Casual Loading

The National Minimum Wage (from 1 July 2026) is $26.44 per hour for full-time and part-time employees. Most employees are covered by an award or registered agreement that sets higher minimum rates. Award rates vary by industry and classification. Casual employees receive a 25% loading on top of the base rate – that’s $33.05 per hour for the minimum wage. Use the checkbox on the timesheet to add casual loading. Never enter a rate that already includes casual loading; the calculator adds it for you.

Super guarantee is paid on top of your gross earnings. Employers must contribute 12% of your ordinary earnings (up to the maximum contribution base of $270,830 per year). For a $26.44/hour employee, the employer pays an extra $3.17 per hour into super. The calculator shows estimated super as 12% of your ordinary earnings.

Salary Sacrificing into Super

Salary sacrificing into super is a powerful way to boost your retirement savings. It works by exchanging part of your pre-tax salary for super contributions. The Australian Taxation Office explains that these are employer contributions, not personal contributions, and they do not reduce the amount your employer calculates your super guarantee on.

How Salary Sacrificing Affects Tax and Super

When you salary sacrifice, the sacrificed amount is not counted as assessable income for tax purposes. It is taxed in your super fund at 15% (the concessional rate), which is usually lower than your marginal tax rate. This reduces your PAYG withholding and can lower your overall tax bill. However, there are limits: the concessional contributions cap for 2026–27 is $32,500 per financial year. This cap includes your employer’s super guarantee contributions, so if you earn a high salary, you may hit the cap quickly.

Important Rules from Fair Work and the ATO

The Fair Work Ombudsman states that super is an entitlement under the National Employment Standards. Employers must pay super guarantee each payday from 1 July 2026 (Payday Super). Salary sacrifice contributions are additional to the super guarantee – your employer cannot use salary sacrifice to reduce their 12% obligation.

If you are considering salary sacrificing, check your award or enterprise agreement. Some awards have extra super terms that may affect how much you can sacrifice. For more guidance, see our super and packaging page.

Example: Salary Sacrificing on a $40/Hour Wage

Suppose you earn $40 per hour, 38 hours a week, annual gross $79,040. Your employer pays super guarantee of $9,484.80 (12% of $79,040). If you salary sacrifice $200 per fortnight ($5,200 per year), your taxable income drops to $73,840. You save tax at your marginal rate (30% plus 2% Medicare levy = 32%), so you save about $1,664 in tax. The $5,200 goes into super taxed at 15% ($780 tax), so net super gain is $4,420. Overall, you are better off by the tax saving minus the super tax difference.

Disclaimer

Annual pay here is hourly rate × hours per week × 52. It assumes the same rate every week, no unpaid overtime, no penalty rates, no allowances, and no salary sacrifice. Super is estimated at 12% of ordinary earnings only, paid on top, and stops at the $270,830 maximum contribution base. Tax is 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 here. 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 details on how your pay compares to averages, see our average pay page. To explore different hourly rates and annual conversions, visit hourly conversion.