Take Michael, 44, an accountant in Sydney earning $145,000 a year. Fund calculators tell him how much super he'll have at 67. They don't tell him how much tax he saves each year, or how salary sacrifice interacts with the Medicare levy surcharge. In 2026–27, filling the rest of his before-tax cap saves him $3,267 in tax, and it doesn't change his surcharge position at all.
Below: the cents you save on every sacrificed dollar in 2026–27, how much of the $32,500 concessional cap is left after your employer's 12%, how to work out your own saving, and why salary sacrifice doesn't cut the Medicare levy surcharge.
Enter your income and sacrifice amount into Velofy's salary sacrifice calculator. It shows the tax saving (cents per $1 at your marginal rate), how much of the cap you've used, a Division 293 flag, and what the extra super could grow to over 30 years.
Cents per $1 saved: your salary sacrifice lookup table
The number most people want is this: how many cents do I save on every dollar I send to super? It depends on your marginal tax rate for 2026–27 (15% / 30% / 37% / 45%) plus the 2% Medicare levy, minus the flat 15% contributions tax inside super. For most full-time workers it's between 17c and 32c on the dollar.
| Taxable income | Marginal rate | Saved per $1 | Saving on $5,000 | Saving on $10,000 |
|---|---|---|---|---|
| $18,201 – $45,000 | 15% + 2% | 2c–7c | Under $350 | Under $700 |
| $45,001 – $135,000 | 30% + 2% | 17c | $850 | $1,700 |
| $135,001 – $190,000 | 37% + 2% | 24c | $1,200 | $2,400 |
| $190,001 – $250,000 | 45% + 2% | 32c | $1,600 | $3,200 |
| $250,001+ | 45% + 2% + Div 293 | 17c | $850 | $1,700 |
2026–27 rates. Saved-per-$1 = marginal rate + 2% Medicare − 15% contributions tax, assuming the whole sacrifice comes off income in the same band. Below $45,000 the 15% rate matches the fund's 15%, so the saving is small; it's nearer 7c between $37,500 and $45,000, where a lower income also brings back some of the low income tax offset. Division 293 adds an extra 15% on contributions once income plus concessional contributions passes $250,000, cutting the top-bracket saving from 32c to 17c. Check your own number with the Velofy salary sacrifice calculator.
Two things stand out in this table:
- $45,000 to $190,000 is where it pays most reliably. In the 30% or 37% band you save 17–24 cents on the dollar, with no investment risk. On a $10,000 sacrifice that's $1,700–$2,400 a year.
- The top-bracket drop. The 32c saving at $190,000–$250,000 falls to 17c once income plus concessional contributions passes $250,000 (Division 293). High earners with a super balance under $500,000 can sometimes put in more using unused cap from earlier years; the calculator handles both.
How Salary Sacrifice Into Super Works
Salary sacrifice is an arrangement with your employer to send part of your before-tax salary to your super fund instead of your bank account. The amount is taxed at 15% inside super (the contributions tax), not at your marginal rate, which for 2026–27 is 15%, 30%, 37% or 45%.
The sequence:
- You agree with your employer to sacrifice $X of your gross salary a year into super.
- Your employer shows the sacrifice as a reportable employer super contribution (RESC) on your income statement.
- Your taxable income drops by $X, which lowers your income tax and Medicare levy.
- Your super fund receives $X, deducts 15% contributions tax, and credits $X × 85% to your account.
The saving is the gap between your marginal rate and the 15% contributions tax. The higher your marginal rate, the bigger the saving per dollar.
The $32,500 Cap: How Much Your Employer Already Uses
The concessional (before-tax) contributions cap for 2026–27 is $32,500, up from $30,000 in 2024–25 and 2025–26. It covers your employer's Super Guarantee (SG), any salary sacrifice, and personal contributions you claim as a deduction. The SG rate has been 12% of ordinary time earnings since 1 July 2025, the final step in the legislated schedule.
Your employer's 12% comes first. What's left is your room to sacrifice:
| Annual income | Employer SG (12%) | Remaining cap for sacrifice (2026–27) | Marginal rate |
|---|---|---|---|
| $60,000 | $7,200 | $25,300 | 30% |
| $80,000 | $9,600 | $22,900 | 30% |
| $100,000 | $12,000 | $20,500 | 30% |
| $135,000 | $16,200 | $16,300 | 30% |
| $145,000 | $17,400 | $15,100 | 37% |
| $190,000 | $22,800 | $9,700 | 37% |
| $250,000 | $30,000 | $2,500 | 45% + Div 293 (30% on contributions) |
| About $270,830+ | $32,500 (whole cap) | $0 | 45% + Div 293 |
Source: ATO Contributions Caps (ato.gov.au).
How to Calculate Your Exact Tax Saving
The formula for your net yearly saving:
Net saving = (Marginal rate + Medicare levy rate − 15%) × Amount sacrificed
Where 15% = contributions tax; Medicare levy = 2%; your marginal rate is from the 2026–27 brackets below. If the sacrifice takes your income across a bracket boundary, work out each part separately.
| Marginal rate | Net saving per $1 sacrificed | Income range (2026–27) |
|---|---|---|
| 15% | 15% + 2% − 15% = 2% | $18,201 – $45,000 |
| 30% | 30% + 2% − 15% = 17% | $45,001 – $135,000 |
| 37% | 37% + 2% − 15% = 24% | $135,001 – $190,000 |
| 45% | 45% + 2% − 15% = 32% | $190,001+ |
Michael's saving ($15,100 sacrificed from $145,000): the first $10,000 comes off income taxed at 37%, and the other $5,100 comes off income taxed at 30%. That's (24% × $10,000) + (17% × $5,100) = $2,400 + $867 = $3,267 net saving for 2026–27.
This is the net figure after the 15% contributions tax paid inside super. Most fund calculators show the amount you sacrifice, not the saving after that tax. The $3,267 is how much more Michael ends up with across his pay and his super than if he'd taken the same money as salary.
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Shop on Amazon AU →The MLS Trap: Salary Sacrifice Alone Does Not Cut Your Surcharge
This is a common salary sacrifice mix-up. It affects anyone above the Medicare levy surcharge (MLS) income threshold who doesn't hold an appropriate level of private hospital cover.
"Salary sacrificed super contributions are treated as Reportable Employer Super Contributions and included in your income for MLS purposes."— Velofy summary of ATO income tests (ato.gov.au)
When you salary sacrifice, your employer reports the amount as a reportable employer super contribution (RESC) on your income statement. The ATO's MLS income test adds your RESC back to your income. This means:
- Your taxable income drops by the amount sacrificed (income tax and Medicare levy saving ✓)
- Your income for MLS purposes = taxable income + RESC = your original gross income (no change in MLS tier ✗)
Michael earns $145,000 and salary sacrifices $15,100, so his taxable income becomes $129,900. His MLS income is still $129,900 + $15,100 (RESC) = $145,000. Salary sacrifice can't move him into a lower MLS tier.
MLS thresholds for 2026–27
The surcharge thresholds rise each year. For 2026–27 the singles threshold is $105,000, up from $101,000 in 2025–26. The 2025–26 figures still apply to the 2025–26 tax return many people are lodging now.
| Tier | Singles income (2026–27) | MLS rate | Singles income (2025–26) |
|---|---|---|---|
| Base tier: no MLS | Up to $105,000 | 0% | Up to $101,000 |
| Tier 1 | $105,001 – $123,000 | 1.0% | $101,001 – $118,000 |
| Tier 2 | $123,001 – $164,000 | 1.25% | $118,001 – $158,000 |
| Tier 3 | $164,001+ | 1.5% | $158,001+ |
Source: Australian Government — privatehealth.gov.au. Family thresholds for 2026–27: base tier up to $210,000; Tier 1 $210,001–$246,000; Tier 2 $246,001–$328,000; Tier 3 $328,001+ (each goes up by $1,500 for every dependent child after the first). For 2025–26 they were $202,000, $236,000 and $316,000.
The upshot: above the MLS threshold, the way to avoid the surcharge is an appropriate level of private hospital cover, not salary sacrifice. Salary sacrifice saves income tax and Medicare levy; the RESC add-back keeps your MLS income where it was.
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Carry-Forward: Using Unused Cap From Earlier Years
If you haven't used your full concessional cap in earlier years, you may be able to put in more than $32,500 this year. Unused cap can be carried forward for five years. In 2026–27 that means unused amounts from 2021–22 to 2025–26. The 2021–22 amount is the oldest, and it expires on 30 June 2027.
To be eligible: your total super balance must have been under $500,000 on 30 June 2026. This limit isn't indexed. Unused amounts are used oldest year first, and only for contributions above this year's cap.
Example: if you sacrificed $20,000 in 2023–24 (when the cap was $27,500), $7,500 of that year's cap is unused. Add the 2026–27 cap of $32,500 and you could make up to $40,000 of concessional contributions in 2026–27, more if you have other unused years, as long as your balance was under $500,000 on 30 June 2026.
To check your unused amounts, log in to myGov and go to ATO → Super → Information → Carry-forward concessional contributions. Our guide to the $32,500 cap and carry-forward walks through the rules and the form you need if you pay the money in yourself.
Velofy's Tax Calculator shows income tax, Medicare levy, and take-home pay. Enter your numbers to see the full picture.
Michael's Full Salary Sacrifice Scenario (2026–27)
Michael, 44, accountant, Sydney. Income $145,000. Holds private hospital cover, so no MLS. Salary sacrifice: $15,100, which fills the rest of his $32,500 cap after his employer's $17,400.
| Item | Without sacrifice | With sacrifice ($15,100) | Change |
|---|---|---|---|
| Gross income | $145,000 | $145,000 | — |
| Salary sacrifice | $0 | $15,100 | — |
| Taxable income | $145,000 | $129,900 | −$15,100 |
| Income tax | $34,720 | $29,490 | −$5,230 |
| Medicare levy (2%) | $2,900 | $2,598 | −$302 |
| MLS (private health held) | $0 | $0 | — |
| Take-home pay | $107,380 | $97,812 | −$9,568 |
| Contributions tax in super (15%) | — | $2,265 | +$2,265 paid |
| Net added to super (after tax) | — | $12,835 | +$12,835 |
| Net yearly saving | +$3,267 |
2026–27 rates, worked out with the same tax engine as the Velofy calculators. Ignores any other deductions or offsets.
For every $1 that leaves Michael's take-home pay ($9,568 in total), about $1.34 lands in his super account ($12,835 after contributions tax). The difference is the tax saving.
What about Division 293?
Division 293 adds an extra 15% tax on concessional contributions for people whose income plus those contributions is more than $250,000. Michael's taxable income after the sacrifice ($129,900) plus his total concessional contributions ($32,500) is $162,400, well below the $250,000 threshold. Division 293 doesn't apply to him.
Division 296 tax, which has applied since 1 July 2026, is separate. It adds 15% on earnings linked to the part of a total super balance above $3 million (the law received Royal Assent in March 2026). It affects a small number of members and doesn't change how salary sacrifice works for most people.
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Shop on Amazon AU →TL;DR: Salary Sacrifice Super 2026–27
- Concessional cap: $32,500 a year (employer's 12% SG counts first; it was $30,000 in 2024–25 and 2025–26)
- Net saving per dollar in the 37% band: 24c (37% + 2% Medicare − 15% contributions tax)
- Net saving per dollar in the 30% band: 17c
- RESC rule: salary sacrifice doesn't lower your MLS income because RESC is added back; private hospital cover is how you avoid the surcharge
- MLS singles threshold for 2026–27: $105,000 ($101,000 for 2025–26)
- Unused cap from 2021–22 to 2025–26 can be used if your total super balance was under $500,000 on 30 June 2026; the 2021–22 amount expires 30 June 2027
- Division 293 applies if income + concessional contributions is more than $250,000 (30% on contributions)
- Division 296 (super balances over $3 million) started on 1 July 2026; it doesn't affect most people
A Sydney accountant on $145,000 who fills the 2026–27 cap with salary sacrifice saves $3,267 in tax for the year, after the contributions tax paid in super. Fund projections show the balance at retirement; this is the yearly saving, and it repeats each year the arrangement continues.
Calculate your exact salary sacrifice saving
Enter your income into Velofy's Tax Calculator to see income tax, Medicare levy and take-home pay before and after salary sacrifice. No account needed.
Free Tax Calculator →Frequently Asked Questions
How much tax do you save with salary sacrifice into super?
The gap between your tax rate plus the 2% Medicare levy, and the 15% tax your super fund pays, on every dollar you sacrifice. At the 30% rate (income $45,001–$135,000) that's 30% + 2% − 15% = 17 cents per dollar. At the 37% rate ($135,001–$190,000) it's 24 cents. These rates are the same for 2025–26 and 2026–27. Source: ATO.
What is the concessional contributions cap for 2026–27?
$32,500, up from $30,000 in 2024–25 and 2025–26. It includes your employer's Super Guarantee (12% since 1 July 2025). So someone earning $145,000 gets $17,400 from their employer, leaving $15,100 of room for salary sacrifice in 2026–27. Going over the cap means the extra is taxed at your marginal rate, less a 15% tax offset. Source: ATO.
Does salary sacrifice into super reduce my Medicare Levy Surcharge?
Not in the way most people hope. Salary-sacrificed super is added back to your income for MLS purposes, so it won't move you into a lower tier or under the threshold. It does lower your taxable income, which the surcharge is charged on, so the amount dips slightly. The way to avoid the surcharge is an appropriate hospital cover policy. Source: ATO.
What is the salary sacrifice super limit for 2026–27 after employer contributions?
The $32,500 cap minus your employer's Super Guarantee (12% of your ordinary pay). For example: on $80,000, employer super is $9,600, leaving up to $22,900 to sacrifice; on $120,000 it's $14,400, leaving $18,100; on $145,000 it's $17,400, leaving $15,100; on $180,000 it's $21,600, leaving $10,900. If your total super balance was under $500,000 on 30 June 2026, unused cap from 2021–22 to 2025–26 can let you put in more. Source: ATO.
Disclaimer: This content is general information only and does not constitute tax or financial advice. Tax laws change. Check figures with a registered tax agent or the ATO at ato.gov.au. Velofy is not a registered tax agent.