Last updated: July 2026
FHSS Salary Sacrifice Strategy 2026: Maximise Your Tax Saving
Salary sacrifice into super through the First Home Super Saver Scheme (FHSS) is one of the most effective tax strategies for Australian first home buyers. By contributing pre-tax income into super, your contributions are taxed at 15% instead of your marginal rate. For most working Australians, this means saving between 2 and 32 cents on every dollar you put aside for a deposit.
How Salary Sacrifice Into Super Works
When you salary sacrifice, a portion of your pre-tax pay goes directly into your super fund as a concessional (before-tax) contribution. Inside super, that money is taxed at a flat 15%, regardless of how much you earn. Outside super, it would be taxed at your marginal rate plus the 2% Medicare levy.
For someone earning $90,000, the marginal tax rate is 30% plus 2% Medicare levy, totalling 32%. In super, the same dollar is taxed at 15%. That is a saving of 17 cents per dollar contributed. Over $15,000 in a single year, that is $2,550 you keep instead of sending to the ATO.
Under the FHSS, you can contribute up to $15,000 per financial year and $50,000 over your lifetime. When you are ready to buy, the ATO releases 85% of your concessional contributions (plus 100% of any non-concessional contributions) along with deemed earnings calculated at the shortfall interest charge rate.
Optimal Contribution Strategy
The value of salary sacrifice depends entirely on your income. The higher your marginal rate, the bigger the gap between what you would pay outside super and the 15% you pay inside. Here is how the numbers look at different income levels, assuming you contribute the full $15,000 per year.
| Taxable Income | Marginal Rate (incl. Medicare) | Net Saving per $1 | Annual Saving on $15k |
|---|---|---|---|
| $45,000 | 17% | 2c | $300 |
| $60,000 | 32% | 17c | $2,550 |
| $80,000 | 32% | 17c | $2,550 |
| $120,000 | 32% | 17c | $2,550 |
| $150,000 | 39% | 24c | $3,600 |
| $200,000 | 47% | 32c | $4,800 |
Note: the second tax bracket was cut from 16% to 15% from 1 July 2026, so the 15% marginal rate now applies from $18,201 to $45,000 in 2026-27. At that rate, the saving from salary sacrifice is a modest 2 cents per dollar (15% plus the 2% Medicare levy, minus the 15% super contributions tax). Once your income crosses $45,001, the 30% marginal rate kicks in, making the FHSS significantly more valuable — the saving jumps to 17 cents per dollar.
Year-by-Year Savings Plan
The FHSS works best when you plan ahead. Here is a practical timeline for building your deposit over three financial years.
Year 1: Start salary sacrifice ($15,000)
Set up salary sacrifice with your employer or make personal deductible contributions to your super fund. Aim for $15,000 in voluntary concessional contributions during the financial year. Your take-home pay drops by roughly $195 per week on a $90k salary, but $288 per week goes into super (because of the lower tax rate).
Year 2: Continue salary sacrifice ($30,000 total)
Keep the same arrangement running. By the end of year two, you have $30,000 in FHSS-eligible contributions inside super. The tax savings so far: approximately $5,100 for someone in the 30% bracket.
Year 3: Final contributions and request determination
Contribute the remaining amount to reach $50,000 (or $45,000 if you prefer three equal years). Before settlement (ownership transfer) of sale, request an FHSS determination from the ATO through myGov. This tells you the exact amount available for release.
Request release and sign your contract
After receiving your determination, request the release. The ATO instructs your super fund to pay out the eligible amount. Allow 15 to 20 business days. Once funds arrive, you have 12 months to sign a contract of sale.
Couples Strategy
One of the best features of the FHSS is that each person has their own independent entitlement. There is no joint cap. Each individual can contribute up to $50,000, meaning a couple buying together can access up to $100,000 in FHSS funds.
Both partners earning $90k+
Each contributes $15,000 per year for three years. Total FHSS pool: $90,000 in contributions. Combined tax saving: approximately $15,300. Both request determination and release independently.
Staggered timelines
Partners do not need to start at the same time. One person can begin salary sacrificing earlier while the other catches up later. Both must individually meet FHSS eligibility requirements to request a release.
What You Actually Receive on Release
The amount released is not simply your total contributions. The ATO applies a specific formula that accounts for the type of contribution, a release percentage, and deemed earnings.
- Concessional contributions: 85% of eligible amounts are released. The remaining 15% stays in your super fund (this roughly offsets the 15% contributions tax already paid).
- Non-concessional contributions: 100% of eligible amounts are released. These were made from after-tax income so there is no tax adjustment.
- Deemed earnings: The ATO adds an amount calculated at the shortfall interest charge (SIC) rate, compounded on your contributions from the date they were received. This is not actual investment returns; it is a standardised rate set by the ATO.
On release, the assessable amount (concessional contributions plus deemed earnings) is included in your taxable income, but you receive a 30% non-refundable tax offset. For most first home buyers earning between $45,001 and $135,000 (the 30% bracket), this offset almost completely neutralises the tax on release, leaving an effective rate of approximately 2% (the Medicare levy component).
Common Mistakes to Avoid
Requesting release before getting a determination
Always request your FHSS determination first. This confirms the exact amount you can release. Requesting a release without a determination can cause delays and complications.
Exceeding the $15,000 annual cap
Contributions above $15,000 in a single financial year are not FHSS-eligible. The excess stays locked in your super. Track your contributions carefully, especially if you change employers mid-year.
Forgetting the 12-month contract deadline
Once your FHSS funds are released, you have 12 months to sign a contract. If you miss this deadline without applying for an extension, the assessable amount faces a flat 20% tax.
Counting employer SG as FHSS contributions
Your employer's super guarantee (currently 12%) does not count towards the FHSS. Only voluntary salary sacrifice or personal deductible contributions are eligible.
Not checking the concessional contributions cap
Your FHSS salary sacrifice counts towards the overall $32,500 annual concessional contributions cap for 2026-27 (including employer SG). If your total concessional contributions exceed this cap, excess amounts are taxed at your marginal rate.
For a full breakdown of your FHSS release amount and tax benefit based on your specific income and contribution history, use the FHSS calculator.
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Frequently Asked Questions
How much tax do I save by salary sacrificing into the FHSS?
The saving depends on your marginal tax rate. At $90,000 income (30% marginal rate + 2% Medicare levy), you save 17 cents per dollar salary sacrificed because super is taxed at just 15%. Over $45,000 in contributions, that is approximately $7,650 in tax savings.
Can I salary sacrifice more than $15,000 per year into the FHSS?
No. The FHSS cap is $15,000 per financial year per person. Any voluntary contributions above this limit are not eligible for FHSS release and will remain in your super fund.
Does my employer super guarantee count towards the FHSS?
No. Only voluntary contributions count. Your employer's compulsory super guarantee (currently 12%) is not eligible for the FHSS. You need to make additional salary sacrifice or personal deductible contributions on top of the SG.
Can my partner and I both use the FHSS for the same property?
Yes. Each person can independently contribute up to $50,000 and request a separate release. A couple can access up to $100,000 in total FHSS funds for a single property purchase.
Sources:
ATO: First Home Super Saver Scheme | ATO: Tax rates for Australian residents 2026-27 | ATO: Caps on super contributions
Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.