Salary Sacrifice vs Extra Super Contributions: Which Is Better in 2025–26?
CalculatorQuest Editorial Team
Australian Tax & Finance Specialists
Both salary sacrifice and extra super contributions grow your retirement savings — but they work very differently for tax. Getting this right can save thousands of dollars. Here is a clear, practical comparison for 2025-26.
The Core Difference
| Salary Sacrifice (Concessional) | After-Tax Contributions (Non-Concessional) | |
|---|---|---|
| How it works | Pre-tax income goes into super | After-tax income goes into super |
| Tax on contribution | 15% contributions tax | Nil (already taxed) |
| Annual cap (2025-26) | $30,000 (incl. employer SG) | $120,000 |
| Upfront tax saving | Yes — reduces taxable income | No |
| Best for | Reducing tax NOW | High super balances or excess cash |
Tax Savings: Salary Sacrifice by Marginal Rate
When you salary sacrifice, you pay 15% contributions tax instead of your marginal income tax rate. Your saving is the difference:
| Income level | Marginal rate | Contributions tax | Tax saving per $1k sacrificed |
|---|---|---|---|
| $18,201 – $45,000 | 16% | 15% | $10 (minimal benefit) |
| $45,001 – $135,000 | 30% | 15% | $150 (strong benefit) |
| $135,001 – $190,000 | 37% | 15% | $220 (excellent benefit) |
| Over $190,000 | 45% | 30%* | $150 (*Division 293 applies) |
*High earners above ~$250,000 pay an extra 15% via Division 293 tax, bringing contributions tax to 30%.
Example: $80,000 Salary
Say you earn $80,000 and want to boost super by $10,000. Compare the two routes:
| Salary sacrifice $10k | After-tax $10k | |
|---|---|---|
| Income tax saving | $3,000 (30%) | $0 |
| Contributions tax paid | $1,500 (15%) | $0 |
| Net tax saving | $1,500 | $0 |
| Super balance addition | $8,500 (after 15% tax) | $10,000 (no tax) |
Salary sacrifice saves $1,500 upfront. The after-tax contribution adds more to super today but costs more from your pocket. Salary sacrifice is almost always the right first choice for most income levels.
When Is After-Tax Super Better?
- You have already hit the concessional cap ($30,000 including employer SG). You cannot salary sacrifice more — after-tax contributions use a separate $120,000 cap.
- You are in the 16% bracket (income $18,201–$45,000). With only 1% saving per dollar sacrificed, after-tax contributions may make more sense if you have extra cash to invest.
- Tax-free retirement strategy: After-tax contributions create a tax-free component in super, so all withdrawals at retirement are completely tax-free. If you are within 10 years of retirement, this can be valuable.
- Government co-contribution: If you earn under $58,445 (2025-26) and make after-tax contributions, the government co-contributes up to $500 — a 50% instant return!
The Concessional Carry-Forward Rule
If your super balance is under $500,000 and you have not maxed the concessional cap in previous years (from 2019-20 onwards), you can carry forward unused cap space and make a larger concessional contribution in one year. Check your unused cap via your myGov ATO account.
Practical Steps
- Check your current employer SG contribution ($salary × 11.5%) to know how much room is left in the $30,000 cap.
- Use our salary sacrifice calculator to model the take-home impact.
- If your marginal rate is 30%+ and cap room remains, salary sacrifice first.
- If you have maxed the concessional cap, consider after-tax contributions or check carry-forward eligibility.
Frequently Asked Questions
Is salary sacrifice better than after-tax super?
For most Australians earning above $45,000, yes — salary sacrifice saves 15 cents per dollar at the 30% bracket. After-tax contributions are better once you have hit the concessional cap or if you want a larger tax-free component in retirement.
What is the 2025-26 concessional cap?
$30,000 per year, including employer SG contributions. At a $100,000 salary, your employer already contributes $11,500 — leaving $18,500 room for salary sacrifice.
Do I pay tax on salary sacrifice contributions?
Yes — 15% contributions tax is deducted from the super fund on concessional contributions. High earners above ~$250,000 pay 30% via Division 293 tax.
Can I salary sacrifice and make after-tax contributions?
Yes. Salary sacrifice counts against the $30,000 concessional cap. After-tax contributions have their own $120,000 non-concessional cap. You can do both simultaneously.
See your salary sacrifice savings
Model the exact take-home impact of salary sacrifice at your income level.
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