How salary sacrifice for super affects your pay when comparing job offers

What is salary sacrifice for super?

Salary sacrifice for super is an arrangement where you agree to forgo part of your pre-tax salary in exchange for additional employer superannuation contributions. Instead of receiving that money as cash, your employer pays it directly into your super fund. This reduces your taxable income, so you pay less income tax and Medicare levy, but your take-home pay is lower. It is a common feature in many job offers, especially in the public sector and some industries.

How salary sacrifice affects your pay compared to the national line

The Salary Index measures gross ordinary-time earnings before any salary sacrifice. If your gross salary is $108,352 (index 100), that figure does not change whether you sacrifice $5,000 or $20,000 to super. The index is a benchmark for the market rate of a role, not your net position.

However, salary sacrifice changes your net cash flow. For example, a person earning $108,352 (index 100) who sacrifices $10,000 to super has a taxable income of $98,352. Using the 2026–27 tax rates (nil to $18,200; 15% to $45,000; 30% to $135,000; 37% to $190,000; 45% above) plus 2% Medicare, the tax saving is roughly $3,200 (32% of $10,000). Their take-home pay drops by about $6,800, but their super receives an extra $10,000 (which is taxed at 15% inside the fund). Over time, the compounding in super can outweigh the short-term cash reduction.

Comparing job offers with salary sacrifice

When reading a job ad, the advertised salary is almost always the gross amount before any sacrifice. If an employer offers salary sacrifice for super, you need to look beyond the headline number. Here is a concrete example using the reference data:

• Offer A: $115,000 gross, no salary sacrifice.
• Offer B: $110,000 gross, with a $10,000 salary sacrifice option.

First, find the index for each gross salary. $115,000 is about index 106.1 (115,000 ÷ 108,352 × 100). $110,000 is about index 101.5. Offer A has a higher index, meaning the market value of the role is higher. But now compare net outcomes.

For Offer A: taxable income $115,000. Tax (including Medicare) on $115,000: $18,200 tax-free; $26,800 at 15% = $4,020; $70,000 at 30% = $21,000; total tax $25,020 plus Medicare $2,300 = $27,320. Net cash = $115,000 - $27,320 = $87,680. Super guarantee (12%) = $13,800.

For Offer B: taxable income after sacrifice = $100,000. Tax on $100,000: $18,200 tax-free; $26,800 at 15% = $4,020; $55,000 at 30% = $16,500; total tax $20,520 plus Medicare $2,000 = $22,520. Net cash = $100,000 - $22,520 = $77,480. Super guarantee on $110,000 = $13,200, plus sacrificed $10,000 = $23,200 total super contribution.

Offer A gives $10,200 more cash each year, but Offer B gives $9,400 more in super. Depending on your financial goals, one may be better. The index helps you see that Offer A is a higher-paying role in gross terms, but the sacrifice changes the trade-off.

How the pay guides and awards interact

Salary sacrifice cannot reduce your base pay below the minimum wage or the applicable award rate. The national minimum wage from 1 July 2026 is $26.44 per hour ($1,004.90 per week, annualised $52,255, index 48.2). Award minima rose 4.75% from that date. If your role is covered by a modern award, your gross salary after the sacrifice must still meet the award classification rate. For example, a retail worker on the Retail Trade Award (index 75.9) cannot sacrifice so much that their hourly rate falls below the award minimum. Always check the Fair Work Ombudsman for your specific award.

State and industry context

State indices vary: NSW 101.2, VIC 98, QLD 97.9, SA 94.6, WA 106.9, TAS 88.6, NT 95.2, ACT 109.9. When comparing offers across states, the index shows local earning levels. Salary sacrifice is a federal tax arrangement, so the mechanics are the same everywhere, but the relative value of a given gross salary differs. For instance, a $108,352 salary in WA (index 106.9) is below the state average, while the same salary in TAS (index 88.6) is well above. Use the index to normalise offers before factoring in sacrifice.

Similarly, industries have different benchmarks. Mining index 154.7, Professional services 114.7, Education 105.5, Health care 97.8, Retail 75.9, Accommodation and food 72.5. A salary sacrifice offer in mining may be more generous in absolute terms, but the index helps you see how it compares to the industry norm.

Tax considerations and the super guarantee

Salary sacrifice for super reduces your taxable income, which can move you into a lower tax bracket. Using the 2026–27 rates, if your gross salary is $140,000 (index 129.2) and you sacrifice $10,000, your taxable income drops to $130,000, keeping you in the 30% bracket instead of the 37% bracket. The tax saving is 37% + 2% Medicare = 39% on the sacrificed amount, or $3,900. Your take-home pay falls by $6,100, but your super gets $10,000 (less 15% contributions tax).

The super guarantee is 12% from 1 July 2026, with a maximum contribution base of $270,830. Salary sacrifice is in addition to the guarantee. However, total concessional contributions (guarantee plus sacrifice) must not exceed the annual cap (set by the ATO). Exceeding the cap results in additional tax. Always check the current cap with the ATO or your accountant.

How the index works in practice

The how the index works page explains that the index is yearly gross divided by the national line ($108,352) times 100. It is a pure earnings benchmark. Salary sacrifice does not alter your index because it is a pre-tax deduction. When you see a job ad with a salary figure, that is the gross amount used for the index. To compare offers, you can calculate the index for each gross salary, then adjust for sacrifice using the tax brackets above.

Final thoughts

Salary sacrifice for super is a powerful tool to boost retirement savings while reducing tax. But when comparing job offers, do not rely solely on the gross salary or the index. Calculate your net cash and total super contributions. Use the index to understand where the role sits in the market, then apply your personal tax situation. For more on related topics, see our topics page.