Does salary sacrifice reduce Medicare levy?

In most cases, salary sacrifice reduces taxable income. Because the standard Medicare levy is calculated on taxable income, reducing income through salary sacrifice usually reduces the Medicare levy as well.

Is salary sacrifice to super tax effective?

Salary sacrifice contributions to super are taxed at 15% inside super, which is often lower than personal income tax rates, making salary sacrifice tax effective for many Australians.

Are EV novated leases different from standard novated leases?

Eligible electric vehicles may be exempt from fringe benefits tax, allowing more of the lease cost to be packaged pre-tax compared to standard petrol or diesel vehicles.

SALARY SACRIFICE CALCULATOR

SALARY PACKAGING

Current Salary (annual)

Add Medicare levy (2%) Saving on Sacrificed Amount

Employer Super Rate (%)

Concessional Cap

Employer Contribution (Annually)

Calculated as salary × Employer Super Rate.

Salary Sacrifice Amount (Annually)

Cap remaining after employer super: $0

Note: Use Slider Below for Real Time Results Update

$0 $0 max (cap remaining)

Suggested amount: $0

Maximise concessional cap safely (cap includes employer super).

How it works

Your employer redirects part of your gross pay into super before tax is calculated. That amount is taxed at a flat 15% inside super, not at your personal income tax rate.

Note: The Remaining concessional cap reduced after the Employer contributions

Assumptions: Uses Stage-3 income tax rates and optionally Medicare levy (2%). No MLS, HELP/HECS, offsets, or family benefits included.

You'll save in tax annually

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Your Take-Home Pay Impact

Weekly

-$0

Fortnightly

-$0

Monthly

-$0

Annually

-$0

What this means:

—

The Breakdown

Net benefit

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Use this salary sacrifice calculator to estimate how salary sacrificing into superannuation or a novated lease can change your taxable income, tax savings and take-home pay. It’s designed for quick planning and side-by-side comparison — including optional Medicare levy (2%) impact.

What this salary sacrifice calculator can do

Salary sacrifice super calculator (see take-home impact and net benefit)
Employer super vs salary sacrifice shown separately (cap awareness)
Medicare levy toggle to include or exclude the typical 2% effect
Novated lease salary sacrifice modelling with pre-tax vs post-tax impact
EV salary sacrifice comparison so EV packaging isn’t mixed with standard car scenarios

How to use (2 steps)

Step 1: Choose your tab — Super or Novated Lease (and EV where applicable).

Step 2: Enter your salary and packaging amount to instantly see tax saved and your take-home pay change.

Common use cases: maximising concessional super contributions, comparing a car lease to paying cash, and checking whether EV packaging changes your weekly/fortnightly budget.

Salary sacrifice explained — simple, practical

Salary sacrifice means redirecting part of your salary into benefits (like super or a novated lease) before tax is calculated. This can reduce taxable income and change how much tax (and in many cases, Medicare levy) you pay.

When to use “Salary Sacrifice to Super”

Use the super salary sacrifice option when you want to build retirement savings and potentially pay less tax overall, because concessional contributions are generally taxed at a lower rate inside super.

Compare cash vs super impact on take-home pay
See employer contributions and cap remaining
Optionally include Medicare levy (2%) savings

When to use “Novated Lease” (standard vs EV)

Use the novated lease option when you want to package vehicle costs. Standard vehicles often involve a mix of pre-tax and post-tax treatment, while eligible EV packaging can be structured differently.

Model pre-tax vs post-tax impact (standard leases)
Compare EV salary sacrifice vs petrol/diesel scenarios
Translate results into weekly, fortnightly, monthly cash impact

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Note: This calculator is for fast planning and comparisons. Real outcomes can vary with offsets, thresholds, HELP/HECS, MLS, and packaging provider rules. For complex situations, check ATO guidance or speak to a registered tax agent.

FAQs

› Does salary sacrifice reduce the Medicare levy?

In most cases, yes. Salary sacrifice reduces taxable income and the standard 2% Medicare levy is calculated on taxable income. So when taxable income drops, the levy usually drops too. The toggle is optional because exemptions and thresholds can apply.

› Why is “tax saved” higher when Medicare levy is included?

When the Medicare levy option is enabled, the calculator counts income tax savings plus the 2% levy reduction on the sacrificed amount. That’s why the total saving is higher compared to income tax alone.

› Does employer super count toward the concessional cap?

Yes. Employer super contributions and salary sacrifice contributions both count toward your concessional contributions cap.

› Is a novated lease fully pre-tax?

Not always. Standard novated leases often involve a mix of pre-tax and post-tax treatment (depending on packaging rules). Only the pre-tax portion typically reduces taxable income.

› Why are EV salary sacrifice results different?

EV packaging can be structured differently from standard vehicles (including potential FBT differences depending on eligibility), which can change how much of the cost is treated pre-tax and the resulting tax impact.