Salary Sacrificing Australia 2025: Tax Savings & Super Strategies

Salary sacrificing isn’t just a buzzword in Australian finance—it’s a genuine strategy for stretching your income further. As the rules and benefits evolve in 2025, more Aussies are asking: Is salary sacrificing worth it? Here’s how the latest changes can help you take home more, boost your super, and tap into tax advantages.

What Is Salary Sacrificing—and Why Consider It?

Salary sacrificing (also known as salary packaging) is an arrangement with your employer to receive less cash income in exchange for benefits paid directly from your pre-tax salary. The goal? To reduce your taxable income and gain more value from your earnings.

• Common benefits: Extra superannuation contributions, novated car leases, laptops, work-related devices, and even meal entertainment (depending on your employer).
• Who can use it: Most employees, especially those in the public sector, health, education, and larger private firms with established packaging programs.

For example, if you earn $90,000 and salary sacrifice $10,000 into super, only $80,000 is subject to PAYG tax—potentially saving hundreds, if not thousands, in tax each year.

2025 Policy Updates: What’s Changed?

Australian salary packaging rules saw key tweaks in the 2024-25 financial year:

• Concessional contribution cap rise: The annual before-tax (concessional) super cap increased to $30,000 from 1 July 2024, up from $27,500. This gives more room for strategic super salary sacrificing.
• Electric vehicle (EV) FBT exemption: The Fringe Benefits Tax exemption for eligible EVs remains in place for 2025, making novated leasing of EVs a standout salary sacrifice option for climate-conscious workers.
• Superannuation on salary sacrifice: Compulsory employer contributions (the Super Guarantee, now 11.5%) must be paid on your original base salary, not the reduced post-sacrifice amount—ensuring your nest egg isn’t short-changed.

Employers also face stricter reporting requirements, with all salary sacrifice contributions now shown on your income statement (accessible via myGov and the ATO).

Smart Ways to Salary Sacrifice in 2025

Here’s how Australians are making the most of salary sacrificing this year:

1. Supercharge Your Super

With the new $30,000 concessional cap, many are boosting their retirement savings while trimming their tax bill. For those earning above $45,000, salary sacrificing into super can cut your marginal tax rate from up to 47% down to just 15% on sacrificed amounts. Over time, the compounding effect can add tens of thousands to your super balance.

2. Drive a New EV for Less

Novated leasing an electric car via salary sacrifice is booming in 2025. Thanks to the ongoing FBT exemption for eligible EVs under the federal Electric Car Discount policy, employees can save thousands on running costs while helping the environment. For instance, on a $60,000 EV, salary packaging can result in savings of $6,000–$8,000 per year compared to buying outright.

3. Maximise Work-Related Benefits

Depending on your employer, you might be able to salary sacrifice laptops, phones, and even certain memberships—reducing your taxable income while upgrading your tech. Health and not-for-profit workers can access additional fringe benefits tax concessions, such as meal entertainment or accommodation, up to set annual limits.

Potential Pitfalls and How to Avoid Them

• Contribution caps: Exceeding concessional caps on super can trigger excess tax. Keep an eye on your total super contributions, including employer and personal amounts.
• Cash flow: Salary sacrificing reduces your take-home pay, so budget accordingly.
• Not all employers offer it: Smaller businesses may not have packaging programs, and terms differ widely between workplaces.
• Impact on entitlements: Some benefits (like leave loading or redundancy) are calculated on your post-sacrifice salary—check your contract.

Always check with your payroll or HR team before entering any salary sacrifice agreement, as the paperwork and timing can affect your tax outcome.

Conclusion: Should You Salary Sacrifice in 2025?

With increased super caps, EV tax perks, and a continued focus on workplace flexibility, salary sacrificing is more appealing than ever for Australians looking to get ahead. While the savings can be substantial, the best strategy depends on your income, goals, and employer options.