Salary packaging health and the national average
Salary packaging health is a way to use pre-tax income for eligible health expenses, reducing your taxable income. While the Average Line index does not publish a specific salary for this arrangement, we can compare your gross pay against the national full-time average of $108,352 a year (ABS Average Weekly Earnings, May 2026). Understanding how salary packaging affects your take-home pay requires a look at tax brackets, the minimum wage, and the medians.
What is salary packaging health?
Salary packaging health allows you to sacrifice part of your salary to pay for health-related items before tax is calculated. Common examples include private health insurance premiums, hospital and medical expenses, dental treatment, and some medical devices. For employees of public hospitals, charities, and certain not-for-profit organisations, this can be a significant benefit. The Australian Taxation Office (ATO) sets rules on what qualifies and caps for certain benefits.
How it compares to the full-time average
The national full-time adult ordinary-time average is $2,083.70 per week, or $108,352 per year. If your gross salary is at this level, salary packaging health expenses could reduce your taxable income. For instance, packaging $5,000 in health costs would bring your taxable income to $103,352. Under the 2026–27 resident tax rates, you would save tax at your marginal rate. In the 30% bracket (which applies from $45,001 to $135,000), that saves $1,500 in tax plus the 2% Medicare levy, totalling $1,600. Your take-home pay increases accordingly.
However, the average is a gross figure. The median full-time employee earns about $90,532 (ABS Employee Earnings, August 2025), and the all-employees median is $74,100. If you earn below the average, salary packaging can still be beneficial, but the tax savings are smaller because your marginal rate may be lower.
Tax and take-home pay
The 2026–27 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% (with possible reductions for low-income earners). Salary packaging health reduces your taxable income, so you pay less tax and Medicare levy. For example, someone earning $108,352 (the average) who packages $5,000 in health costs moves to $103,352 taxable. Tax on $103,352: $0 on first $18,200; $4,020 on next $26,800 (15%); $17,505.60 on next $58,352 (30%) = total tax $21,525.60 plus Medicare $2,067.04 = $23,592.64. Without packaging, tax on $108,352: $0 + $4,020 + $19,005.60 (30% on $63,352) = $23,025.60 plus Medicare $2,167.04 = $25,192.64. Saving $1,600. So take-home pay increases from $83,159.36 to $84,759.36.
State averages and salary packaging
State full-time averages vary. For example, New South Wales average is $109,658, Victoria $106,137, Queensland $106,064, South Australia $102,450, Western Australia $115,825, Tasmania $96,008, Northern Territory $103,173, Australian Capital Territory $119,090. If you work in a state with a higher average, your salary may be above the national average, and salary packaging health could yield larger tax savings due to higher marginal rates. Conversely, in lower-average states like Tasmania, packaging may still help but the savings are proportional.
Minimum wage context
The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week, or $52,255 per year on a 38-hour week. Award minimums rose 4.75%. At this level, salary packaging health is less common because minimum wage workers often do not have access to such arrangements. However, if available, packaging health expenses could reduce taxable income below the tax-free threshold, potentially eliminating tax liability. But the Medicare levy may still apply.
How the figures are set
The national average is from ABS Average Weekly Earnings, May 2026. Medians are from ABS Employee Earnings, August 2025. The minimum wage is from Fair Work, effective 1 July 2026. These are distinct measures. The average is higher than the median because high earners pull the average up. Salary packaging health does not change these benchmarks but affects your personal position relative to them.
Internal links
For more on how your salary compares, Place a salary on the line. To see averages by state, visit States and territories. For median salaries by occupation, see Job medians. For industry medians, see Industry medians. For guides on salary packaging and tax, see Guides. For how we calculate figures, see How the figures are set. For more about this site, see About this site.
Summary
Salary packaging health is not a specific role in the Average Line index. The national full-time average is $108,352. Your take-home pay with salary packaging depends on your gross salary, tax bracket, and the amount packaged. Use the tools on this site to see where you stand.