How Much Can I Salary Sacrifice? A Guide for Comparing Job Offers

How Much Can I Salary Sacrifice?

When you see a job ad with a salary figure, it's usually the gross amount before tax and any salary sacrifice arrangements. But if you're comparing offers, you need to know how much you can salary sacrifice and what that means for your take-home pay and overall compensation.

Salary sacrifice lets you redirect part of your pre-tax salary towards benefits like extra superannuation, a car through a novated lease, or other approved items. The sacrificed amount is not included in your taxable income, so you pay less income tax. However, the benefit itself may be taxed (for example, super contributions are taxed at 15% inside the fund, and some fringe benefits attract FBT).

How Salary Sacrifice Affects Your Take-Home Pay

Let's look at a concrete example using the 2026–27 tax rates from the ATO. The national line for full-time adult ordinary-time earnings is $108,352 per year (index 100). Suppose you have two job offers:

• Offer A: $110,000 gross, no salary sacrifice.
• Offer B: $105,000 gross, but you can salary sacrifice $15,000 into super.

Without any sacrifice, Offer A gives you a gross salary index of about 101.5. Your tax (including the 2% Medicare levy) would be roughly $25,720, leaving take-home pay of $84,280.

For Offer B, your taxable income is $105,000 minus the $15,000 sacrifice = $90,000. Tax on $90,000 is about $20,520 plus Medicare $1,800 = $22,320, so take-home pay is $82,680. But the $15,000 sacrificed into super is taxed at 15% inside the fund, so $12,750 goes into your super account. Your total benefit (take-home + super) is $95,430, compared to $84,280 from Offer A. Even though Offer B has a lower gross salary, the salary sacrifice makes you better off overall.

This shows why it's important to ask: "How much can I salary sacrifice?" when comparing offers. A higher gross salary isn't always better if the other offer allows generous salary sacrifice.

What Limits Apply?

The amount you can salary sacrifice depends on the type of benefit and ATO rules. For superannuation, there is an annual concessional contributions cap (which includes your employer's compulsory super guarantee). For the 2026–27 year, the cap is set by the ATO; exceeding it means extra tax. For other benefits like cars, there are FBT exemptions and caps based on the car's value and business use. Your employer may also have its own policies on how much you can sacrifice.

Salary Sacrifice and the Salary Index

The Salary Index measures your gross ordinary-time earnings against the national line of $108,352 (index 100). Salary sacrifice does not change your index because it's based on your gross salary before any deductions. So if your gross salary is $120,000, your index is about 111 regardless of how much you sacrifice. This is useful for comparing base pay levels across jobs, but remember that the index doesn't capture the value of salary sacrifice benefits.

When you read a job ad, look for any mention of salary sacrifice options. Some employers advertise a "total remuneration package" that includes the value of salary sacrifice benefits. Others list only the base salary. To compare fairly, you need to know the gross salary and what sacrifice options are available.

Other Considerations

• Super guarantee: Your employer must pay 12% super on your ordinary time earnings (from July 2026). Salary sacrifice into super can reduce your ordinary time earnings, which may lower the compulsory super your employer pays. Check with your employer or the ATO.
• Awards and minimum wage: If you're covered by a modern award, your base pay must meet the award minimum. Salary sacrifice cannot reduce your pay below the award rate or the national minimum wage ($26.44/hr from July 2026). The pay guides on this site can help you check award rates.
• State differences: The salary index varies by state. For example, Western Australia has an index of 106.9 ($115,825 annualised), while Tasmania is 88.6 ($96,008). If you're comparing offers in different states, use the states page to see how local earnings compare.

How to Ask About Salary Sacrifice

When you receive a job offer, ask the employer:

• "How much can I salary sacrifice?"
• "What benefits are available?"
• "Does salary sacrifice affect my super guarantee?"
• "Are there any limits or fees?"

This information will help you calculate the true value of the offer. Use the how the index works page to understand how gross pay benchmarks work, and check topics for more on salary sacrifice and related subjects.

Final Thoughts

Salary sacrifice can significantly boost your overall compensation, especially if you use it for super or a car. But the amount you can sacrifice is not unlimited, and the benefits depend on your tax bracket and the type of sacrifice. Always compare offers on a like-for-like basis, considering both gross salary and the net value of any sacrifice arrangements. The salary index gives you a quick way to compare gross pay levels, but for a full picture, you need to factor in tax, super, and salary sacrifice.