Michael Torres is 44, an accountant in Sydney earning $145,000 a year. He has been salary sacrificing into super for years but has always been told by fund calculators how much super he will accumulate — never how much tax he actually saves each year, or how his sacrifice interacts with the Medicare Levy Surcharge. When he ran his numbers through Velofy, the answer was $3,024 in net annual tax saving — and a clear explanation of why salary sacrifice alone does not reduce his MLS bill.
This guide covers the full salary sacrifice calculation for 2025-26: how the $30,000 concessional cap works now that SGC has risen to 12%, how to calculate your exact net tax saving, and the widely misunderstood RESC rule that means salary sacrifice does not automatically cut your Medicare Levy Surcharge.
Enter your income + sacrifice amount into Velofy's dedicated salary sacrifice calculator. It returns the exact tax saving (cents per $1 at your marginal rate), concessional cap tracker, Division 293 flag, and the 30-year compound super impact — all client-side.
Cents per $1 saved — your salary sacrifice lookup table
The single number most people want from a salary sacrifice calculator is this: how many cents do I save on every dollar I redirect into super, right now? The answer depends on your Stage 3 marginal income tax rate (16% / 30% / 37% / 45%) plus the 2% Medicare Levy, minus the flat 15% contributions tax inside super. For most working Australians it lands 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 | 16% + 2% | 3c | $150 | $300 |
| $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 |
Saved-per-$1 = marginal rate + 2% Medicare − 15% contributions tax. Division 293 adds an extra 15% on contributions for combined income + concessional contributions over $250,000 — halving the top-bracket saving from 32c to 17c. Maximums assume the sacrifice fits within your remaining $30,000 concessional cap after employer SGC. Verify your specific number with the Velofy salary sacrifice calculator.
Two patterns jump out from this table:
- The "sweet spot" is $45k–$190k. Anyone in the 30% or 37% bracket saves 17–24 cents on the dollar — a steady return with no investment risk. On a $10,000 annual sacrifice that's $1,700–$2,400 cleared in tax savings every year.
- The top-bracket trap. The 32c-per-$1 saving at $190k–$250k drops sharply to 17c once income plus concessional contributions clears $250k (Division 293). High earners often benefit MORE from personal deductible contributions combined with carry-forward unused caps from prior years — the dedicated calculator handles both.
How Salary Sacrifice Into Super Works
Salary sacrifice is an arrangement with your employer to redirect part of your pre-tax salary into your superannuation fund instead of receiving it as take-home pay. The redirected amount is taxed at 15% inside super (the concessional contributions tax rate), rather than at your marginal income tax rate — which under Stage 3 (in force since 1 July 2024) may be 16%, 30%, 37%, or 45%.
The sequence:
- You agree with your employer to sacrifice $X of your gross salary per year into super.
- Your employer reports the sacrifice as a Reportable Employer Super Contribution (RESC) on your income statement.
- Your taxable income drops by $X — reducing income tax and Medicare Levy.
- The super fund receives $X and deducts 15% contributions tax, crediting $X × 85% to your account.
The tax saving comes from the gap between your marginal rate and the 15% contributions tax. The higher your marginal rate, the larger the saving per dollar sacrificed.
The $30K Cap — SGC Now Eats More of It
The concessional (pre-tax) contributions cap for 2025-26 is $30,000 per year. This cap includes both your employer's Super Guarantee (SGC) contributions and any salary sacrifice you make. From 1 July 2025, the SGC rate increased to 12.0% of ordinary time earnings — the final step in the legislated schedule. This is up from 11.5% in 2024-25.
The practical effect: your employer's contributions now use more of your cap, leaving less room for voluntary salary sacrifice.
| Annual income | Employer SGC (12%) | Remaining cap for sacrifice | Marginal rate |
|---|---|---|---|
| $60,000 | $7,200 | $22,800 | 30% |
| $80,000 | $9,600 | $20,400 | 30% |
| $100,000 | $12,000 | $18,000 | 30% |
| $135,000 | $16,200 | $13,800 | 30% / 37% |
| $145,000 | $17,400 | $12,600 | 37% |
| $190,000 | $22,800 | $7,200 | 37% / 45% |
| $250,000+ | $25,000 (cap limited) | $5,000 | 45% + Div 293 (30% on CC) |
Cap from 1 July 2026: The concessional cap increases to $32,500 when it is next indexed. Source: ATO Contributions Caps (ato.gov.au).
How to Calculate Your Exact Tax Saving
The formula for your net annual saving:
Net saving = (Marginal rate + Medicare Levy rate − 15%) × Amount sacrificed
Where 15% = standard contributions tax; Medicare Levy = 2%; your marginal rate is from the ATO brackets below.
| Marginal rate | Net saving per $1 sacrificed | Income range |
|---|---|---|
| 16% | 16% + 2% − 15% = 3% | $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 (37% bracket, $12,600 sacrificed): 24% × $12,600 = $3,024 net annual saving.
This is the true net figure after the 15% contributions tax is deducted inside super. Most fund calculators show only the gross sacrifice amount — not the net saving after the tax already paid inside the fund. The $3,024 is the real money back in Michael's pocket (or rather, in his super fund above what he would have had after paying income tax).
Velofy may earn a commission on qualifying purchases made through Amazon AU links on this page, at no extra cost to you.
Australia's best-selling personal finance guide — covers salary sacrifice, super strategy, and long-term wealth building. D4 self-education deductible for finance and accounting professionals (no $250 cap since 2022).
Shop on Amazon AU →
The MLS Trap — Salary Sacrifice Alone Does Not Cut Your Surcharge
This is the most common salary sacrifice misunderstanding — and it affects anyone above the MLS income threshold who does not hold eligible private hospital cover.
"Salary sacrificed super contributions are treated as Reportable Employer Super Contributions and included in your income for MLS purposes."— ATO, Income Tests (ato.gov.au)
Here is how the RESC rule works: 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 into 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 MLS reduction ✗)
In practice: if Michael earns $145,000 and salary sacrifices $12,600, his taxable income becomes $132,400. But his MLS income is $132,400 + $12,600 (RESC) = $145,000 — exactly where he started. He cannot reduce his MLS exposure by salary sacrificing.
New MLS thresholds from 1 July 2025
The MLS income thresholds were substantially increased from 1 July 2025 — the third consecutive annual increase. The singles base threshold rose from $93,000 to $101,000.
| Tier | Singles income (2025-26) | MLS rate | Previous threshold (2024-25) |
|---|---|---|---|
| Tier 0 — No MLS | Up to $101,000 | 0% | Up to $93,000 |
| Tier 1 | $101,001 – $118,000 | 1.0% | $93,001 – $108,000 |
| Tier 2 | $118,001 – $158,000 | 1.25% | $108,001 – $144,000 |
| Tier 3 | $158,001+ | 1.5% | $144,001+ |
Source: Australian Government — privatehealth.gov.au. Family thresholds for 2025-26: Tier 0 up to $202,000; Tier 1 $202,001–$236,000; Tier 2 $236,001–$316,000; Tier 3 $316,001+.
The practical advice: if you are above the MLS threshold and want to avoid the surcharge, eligible private hospital cover is the mechanism — not salary sacrifice. Salary sacrifice saves income tax and Medicare Levy; it does not move you below the MLS threshold because RESC adds the sacrifice back.
The foundational value-investing text studied in CPA and CA professional reading lists. Fully deductible as D4 self-education for finance, investment, and accounting roles directly connected to current income-earning activities.
Shop on Amazon AU →
Carry-Forward: The Catch-Up Strategy
If you have not used your full concessional cap in prior years, you may be able to make a larger contribution this year and carry forward the unused amounts. The carry-forward rule lets you access unused concessional cap space from up to five preceding financial years (back to 2018-19 only).
To be eligible: your total superannuation balance must have been under $500,000 at the previous 30 June. This limit is not indexed — it applies as a fixed test each year.
Example: If you sacrificed $20,000 in 2023-24 (when the cap was $27,500), you have $7,500 of unused cap from that year available to carry forward. Combined with the current $30,000 cap, you could potentially contribute up to $37,500 in total concessional contributions in 2025-26, subject to your balance check.
To check your available carry-forward amounts, log into your ATO Online Services account via myGov → ATO → Super → Carry-forward concessional contributions.
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
Michael Torres, 44, accountant, Sydney. Income $145,000. Private hospital cover held (no MLS). Salary sacrifice: $12,600 (filling the remaining cap after 12% SGC).
| Item | Without sacrifice | With sacrifice ($12,600) | Change |
|---|---|---|---|
| Gross income | $145,000 | $145,000 | — |
| Salary sacrifice | $0 | $12,600 | — |
| Taxable income | $145,000 | $132,400 | −$12,600 |
| Income tax | $38,717 | $34,055 | −$4,662 |
| Medicare Levy (2%) | $2,900 | $2,648 | −$252 |
| MLS (private health held) | $0 | $0 | — |
| Take-home pay | $103,383 | $95,697 | −$7,686 |
| Contributions tax in super (15%) | — | $1,890 | +$1,890 paid |
| Net added to super (after tax) | — | $10,710 | +$10,710 |
| Net annual saving | +$3,024 |
The $3,024 represents the wealth advantage of the sacrifice: for every $1 that leaves Michael's take-home pay ($7,686 reduction), $1.39 goes into his super account ($10,710 added net of tax). The difference is the tax saving — and at 37% marginal rate, it is the highest-impact legal tax strategy available to him outside of investment deductions.
What about Division 293?
Division 293 imposes an additional 15% tax on concessional contributions for high earners whose income plus concessional contributions exceeds $250,000. Michael's income ($145,000) plus total concessional contributions ($30,000) = $175,000 — well below the $250,000 threshold. Division 293 does not apply to him.
From 1 July 2026, the separate Division 296 tax applies to super members with total superannuation balances above $3 million (legislation received Royal Assent March 2026). This affects a small number of members and does not alter the salary sacrifice strategy for the vast majority of Australians.
For accountants and finance professionals visiting clients — the ATO-compliant logbook method lets you claim your actual work-use percentage instead of the 5,000km cents-per-km cap. Logbook itself is under $300, immediately deductible.
Shop on Amazon AU →From the founder of "My Millennial Money" — Australian-context super, salary sacrifice, budgeting and investing. D4 self-education deductible for finance and accounting roles where it relates to current duties.
Shop on Amazon AU →TL;DR — Salary Sacrifice Super 2025–26
- Concessional cap: $30,000/yr (SGC 12% comes first; rises to $32,500 from 1 Jul 2026)
- Net saving per dollar at 37% bracket: 24% (37% + 2% ML − 15% contributions tax)
- Net saving per dollar at 30% bracket (Stage 3): 17%
- RESC rule: salary sacrifice does NOT reduce MLS income — RESC adds it back; private hospital cover is the MLS solution
- New MLS singles base threshold: $101,000 (from $93,000, effective 1 Jul 2025)
- Carry-forward available if total super balance <$500K at prior 30 June — check via myGov
- Division 293 applies if income + concessional contributions >$250,000 (30% total)
- Division 296 (super balance >$3M) starts 1 July 2026 — not relevant for most
A Sydney accountant on $145,000 who fills the concessional cap via salary sacrifice saves $3,024 net per year — after the contributions tax already paid in super. Most fund projections show you the 20-year accumulation; this is the annual cash advantage, available every financial year.
Calculate your exact salary sacrifice saving
Enter your income into Velofy's Tax Calculator — see income tax, Medicare Levy, and take-home pay before and after salary sacrifice. No account needed, 100% private.
Free Tax Calculator →Frequently Asked Questions
How much tax do you save with salary sacrifice into super?
The tax saving equals the difference between your marginal rate and the 15% contributions tax, plus a 2% Medicare Levy saving on the sacrificed amount. Under Stage 3 brackets (in force since 1 July 2024): at the 37% marginal rate (income $135,001–$190,000): 37% + 2% − 15% = 24% net saving per dollar sacrificed. At the 30% rate ($45,001–$135,000): 30% + 2% − 15% = 17% per dollar. Source: ATO salary sacrificing super (ato.gov.au).
What is the concessional contributions cap for 2025-26?
The concessional cap for 2025-26 is $30,000 per year, including employer SGC (now 12% from 1 July 2025). An employee earning $145,000 receives $17,400 in employer SGC, leaving $12,600 cap space for salary sacrifice. The cap increases to $32,500 from 1 July 2026. Exceeding the cap triggers excess contributions tax at your marginal rate. Source: ATO Contributions Caps (ato.gov.au).
Does salary sacrifice into super reduce my Medicare Levy Surcharge?
No — not automatically. Salary sacrificed amounts are reported as Reportable Employer Super Contributions (RESC) and added back into your income for MLS purposes. Salary sacrifice reduces your taxable income but your MLS income test stays at your original gross income. Private hospital cover (not salary sacrifice) is what eliminates the MLS. Source: ATO income tests (ato.gov.au), Medicare Levy Surcharge instructions.
What is the salary sacrifice super limit for 2025-26 after employer contributions?
Your maximum salary sacrifice is the $30,000 concessional cap minus your employer's SGC (12% of ordinary time earnings from 1 July 2025). Examples: $80,000 income → SGC $9,600 → maximum sacrifice $20,400; $120,000 → SGC $14,400 → maximum $15,600; $145,000 → SGC $17,400 → maximum $12,600. Carry-forward provisions may allow higher contributions if your super balance was under $500,000 at the prior 30 June. Source: ATO (ato.gov.au).
Disclaimer: This content is general information only and does not constitute tax or financial advice. Tax laws change frequently — verify all figures with a registered tax agent or the ATO at ato.gov.au. Velofy is not a registered tax agent. Last reviewed: 12 May 2026.