How salary sacrificing works
Salary sacrificing is a common way to reduce your taxable income by swapping part of your before-tax salary for benefits. The Australian Bureau of Statistics (ABS) defines it as “an arrangement where an employee agrees to forgo part of their pre-tax salary in return for benefits”. Typical benefits include extra superannuation contributions, a novated car lease, or electronic devices. The sacrificed amount is not treated as assessable income, so you pay less tax.
How salary sacrificing interacts with earnings measures
The ABS publishes two key earnings series: average weekly earnings (which excludes salary sacrifice) and average weekly cash earnings (which includes salary sacrifice). The national full-time average used on this site comes from the first series – Average Weekly Ordinary Time Earnings (AWOTE) for full-time adults. In May 2026, that figure was $2,083.70 per week, or about $108,352 per year (multiplied by 52). This amount represents gross earnings before any salary sacrifice arrangement.
When you compare your salary to this average, you use your before-tax salary – the amount you and your employer agree on – not the reduced cash amount you receive after sacrifice. So salary sacrificing does not change where your pay sits against the national line.
Why salary sacrificing matters for your take-home pay
Even though it doesn’t affect the comparison to the average, salary sacrificing can significantly boost your after-tax position. By reducing your taxable income, you pay less income tax and Medicare levy. For example, if you earn $110,000 and sacrifice $10,000 into super, your taxable income drops to $100,000. Using the 2026–27 tax rates (nil to $18,200; 15% to $45,000; 30% to $135,000; 37% to $190,000; 45% above $190,000, plus 2% Medicare levy), you save the difference between the marginal rates on that $10,000.
Common salary sacrifice arrangements
- Superannuation: The most popular. Contributions are taxed at 15% instead of your marginal rate (up to concessional caps).
- Novated leases: A car lease where payments come from pre-tax salary.
- Other benefits: Laptops, phones, childcare (if offered by employer).
Each arrangement has specific rules set by the ATO. Your employer must offer salary sacrificing; it is not a right.
Where your pay sits against the national average
The site’s line is the full-time adult ordinary-time average of $108,352 per year. 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.
If your before-tax salary is above $108,352, you are above the average full-time worker. If below, you are below. Salary sacrificing does not alter that benchmark – it only changes how much tax you pay and what benefits you receive.
Practical steps
To see where your salary sits, place a salary on the line. The tool uses your yearly before-tax figure and shows the weekly and hourly equivalents on a 38-hour week, plus the distance from the national full-time average. For more on how the figures are set, see How the figures are set.
Key points to remember
- Salary sacrificing reduces taxable income but not the gross salary used for comparison to the national average.
- The ABS AWOTE figure of $2,083.70 per week excludes salary sacrifice.
- Tax savings depend on your marginal rate and the type of benefit.
- Always check with your employer and a tax professional before entering an arrangement.
For further reading, explore our Guides on salary packaging and tax-effective strategies.