Salary Sacrifice vs After-Tax Super Contributions
Two ways to boost your super — one is taxed less going in, the other gives you more flexibility. Here's how they compare.
Salary Sacrifice vs After-Tax Super Contributions
There are two main ways to add extra money to your super beyond your employer's compulsory Super Guarantee: salary sacrifice (concessional/before-tax) and after-tax contributions (non-concessional). Both boost your retirement savings, but they are taxed differently and suit different situations.
Your choice between the two affects:
- How much tax you pay on the contribution
- Your take-home pay
- Which contribution cap applies
- Whether you get an immediate tax benefit
Use our Salary Sacrifice Calculator to model how salary sacrifice affects your take-home pay and tax.
Salary Sacrifice Contributions
Salary sacrifice contributions are paid from your pre-tax salary through a payroll arrangement with your employer. Because the money goes into super before income tax is calculated, you pay only 15% contributions tax inside the fund instead of your marginal tax rate. The higher your marginal rate, the bigger the saving.
| Income Range | Marginal Rate | Super Tax | Tax Saving |
|---|---|---|---|
| $45,001 – $135,000 | 30% | 15% | 15% |
| $135,001 – $190,000 | 37% | 15% | 22% |
| $190,001+ | 45% | 15% | 30% |
After-Tax Super Contributions
After-tax (non-concessional) contributions are made from money you have already paid income tax on. You contribute directly to your super fund — no employer involvement required. Because the money has already been taxed, no additional tax is applied inside the fund.
- No 15% contributions tax — the money has already been taxed at your marginal rate
- Subject to the non-concessional cap ($120,000 per year in 2025–26)
- Can be made as lump sums at any time during the financial year
- Can be converted to concessional contributions by claiming a tax deduction (via Notice of Intent to your super fund)
- May qualify for the government co-contribution (up to $500) for lower-income earners
Key Differences
| Feature | Salary Sacrifice | After-Tax |
|---|---|---|
| Contribution type | Concessional (before-tax) | Non-concessional (after-tax) |
| Who arranges it | Employee & employer via payroll | Individual contributes directly to super fund |
| Tax on contribution | 15% contributions tax inside super | No additional tax — already taxed at marginal rate |
| Annual cap (2025–26) | $30,000 (shared with SG & deductible contributions) | $120,000 (with bring-forward up to $360,000) |
| Immediate tax benefit | Yes — reduces taxable income | No (unless claimed as a deduction, converting to concessional) |
| Common use | Regular tax-effective saving via payroll | Lump-sum top-ups, windfalls, or exceeding concessional cap |
Worked Example: $100,000 Salary
Comparing the effect of contributing an extra $10,000 to super via each method.
Option 1: Salary Sacrifice $10,000
Gross salary: $100,000
Salary sacrifice: $10,000 into super (pre-tax)
Taxable income: $90,000
Income tax + Medicare: ~$19,288 + $1,800
15% super tax on $10,000: $1,500
Take-home pay: ~$68,912
Added to super: $8,500 (net of 15% tax)
Option 2: After-Tax Contribution $10,000
Gross salary: $100,000
Taxable income: $100,000
Income tax + Medicare: ~$22,788 + $2,000
Take-home pay before contribution: ~$75,212
After-tax contribution: $10,000 from take-home pay
Take-home pay: ~$65,212
Added to super: $10,000 (no additional tax)
Comparison: With salary sacrifice, you keep $3,700 more in take-home pay ($68,912 vs $65,212) because the contribution is made before income tax. However, the after-tax method puts $1,500 more into your super ($10,000 vs $8,500) because there is no 15% contributions tax.
The right choice depends on whether you value higher take-home pay (salary sacrifice) or a larger super balance (after-tax). Use our Salary Sacrifice Calculator to model your specific situation.
Contribution Limits (2025–26)
Concessional (Before-Tax) Cap
The total concessional cap for 2025–26 is $30,000 per financial year. This includes:
- Employer Super Guarantee (currently 12%)
- Salary sacrifice contributions
- Personal contributions claimed as a tax deduction
Non-Concessional (After-Tax) Cap
The non-concessional cap for 2025–26 is $120,000 per financial year. If you are under 75, you may be able to use the bring-forward rule to contribute up to $360,000 over three years. The bring-forward amount is reduced if your total super balance is above $1.66 million. No non-concessional contributions are allowed if your balance exceeds $1.9 million.
When Salary Sacrifice Is Usually Better
- Your marginal tax rate is 30% or higher (income above $45,000) — the gap between your marginal rate and the 15% super tax is significant
- You want a regular, automatic contribution deducted from each pay cycle without having to manage it yourself
- You have not yet used your full $30,000 concessional cap (after accounting for employer SG)
When After-Tax Contributions May Be Better
- You have already reached the $30,000 concessional cap and want to contribute more to super
- You have a lump sum (e.g., inheritance, bonus, or savings) that you want to put into super in one go
- Your income is below $45,000 and the marginal rate saving from salary sacrifice is minimal — you may also qualify for the government co-contribution
- You plan to claim a tax deduction on your personal contribution (via a Notice of Intent), effectively converting it to a concessional contribution without needing an employer payroll arrangement
Frequently asked questions
Sources
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