Can you salary sacrifice your mortgage?
Many Australians wonder whether they can use salary sacrifice to reduce their mortgage repayments. The short answer is no: the Australian Tax Office (ATO) does not permit salary sacrificing a personal home loan because mortgage repayments are a private expense, not a fringe benefit. Salary sacrifice arrangements are designed for benefits like superannuation, cars, or work-related items that are otherwise deductible or exempt under Fringe Benefits Tax (FBT) rules.
If you are looking to lower your taxable income, salary sacrificing into super is a common strategy. But how does that affect where your pay sits against the national full-time average? This article explains the rules and shows how state and award differences can move your salary off the national line.
The national full-time average line
The site's line is based on the ABS Average Weekly Earnings for May 2026: $2,083.70 per week, or about $108,352 per year (multiplied by 52). This is the full-time adult ordinary-time average. For comparison, the full-time median (from ABS Employee Earnings, August 2025) is about $90,532, and the all-employees median is about $74,100. The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week, or about $52,255 per year on a 38-hour week.
When you consider salary sacrifice, your pre-sacrifice salary is what the line measures. If you sacrifice part of your pay into super, your taxable income drops, but the line remains the same. That is why it is important to understand the difference between gross earnings and take-home pay.
Why a state or an award can move the figure off the national line
State averages vary significantly. For example, the Australian Capital Territory has the highest full-time average at about $119,090, while Tasmania is the lowest at about $96,008. Western Australia ($115,825) and New South Wales ($109,658) are above the national line, while Victoria ($106,137) and Queensland ($106,064) are slightly below. South Australia ($102,450) and the Northern Territory ($103,173) also sit under the national average.
Award rates also matter. The national minimum wage rose 4.75% in July 2026, but many awards pay above that. If you are covered by an award that sets a higher minimum, your base pay may be closer to or above the national average. For instance, a hospitality award might pay below the average, while a construction award could be above.
Salary sacrifice does not change your award rate or state average; it only affects how much tax you pay. But if you are considering salary sacrificing into super, your employer must still pay the award or minimum wage in cash. The sacrificed amount is redirected to super, not to your mortgage.
How salary sacrifice interacts with the line
Let us say you earn the national full-time average of $108,352. If you salary sacrifice $15,000 into super, your taxable income becomes $93,352. That is below the full-time median of $90,532? Actually, $93,352 is slightly above the median. But your gross earnings are still $108,352, so the line shows you are at the national average. The salary sacrifice does not move the line; it moves your effective income for tax purposes.
If you live in a state with a higher average, like the ACT, your gross pay might be $119,090. Salary sacrificing could bring your taxable income down to $104,090, still above the national line. In Tasmania, with an average of $96,008, sacrificing $10,000 would leave you with $86,008 taxable, below the national median.
Alternatives to salary sacrificing a mortgage
Since you cannot salary sacrifice your mortgage directly, consider these options:
- Salary sacrifice into super: Reduces taxable income and builds retirement savings. The ATO caps concessional contributions at $30,000 per year (2026–27).
- Negative gearing: If you own an investment property, you can deduct mortgage interest from your rental income, lowering your tax.
- First Home Super Saver Scheme: Allows you to withdraw voluntary super contributions for a home deposit.
- Tax offsets: The low-income tax offset and Medicare levy reductions can help if your taxable income is below certain thresholds.
For more on how your salary compares, visit Place a salary on the line or see States and territories.
Understanding the tax brackets
For 2026–27, resident tax rates are: nil on the first $18,200; 15% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; and 45% above $190,000. The Medicare levy is 2% before any reductions. If you salary sacrifice into super, the contributions are taxed at 15% inside the fund, which can be lower than your marginal rate.
For example, if you earn $108,352 (national average) and sacrifice $10,000, your taxable income is $98,352. You save 30% on that $10,000 (since you are in the 30% bracket), meaning $3,000 less tax. The super fund pays 15% ($1,500), so you effectively gain $1,500 in tax savings. That does not help your mortgage directly, but it frees up cash flow.
Conclusion
While you cannot salary sacrifice your mortgage, understanding where your pay sits relative to the national average can help you plan. State and award differences are the main reasons your salary may be above or below the line. Use the tools on this site to see how your earnings compare. For more guides, see Guides or How the figures are set.
Frequently asked questions
Can I salary sacrifice my mortgage if I have a home office? No. Even if you work from home, mortgage repayments are not a salary sacrifice item. You may be able to claim a portion of interest as a deduction if you have a dedicated home office, but that is a tax deduction, not a salary sacrifice.
Does salary sacrifice affect my award rate? No. Your award or minimum wage must be paid in cash before any sacrifice. The sacrificed amount is a voluntary reduction in take-home pay, not a reduction in your base rate.
How do I find my state's average salary? The on-site notes provide state full-time averages from ABS data. For example, New South Wales is about $109,658, Victoria $106,137, and so on. Visit States and territories for the full list.