What is salary sacrifice?
Salary sacrifice, also known as salary packaging, is a common arrangement in Australian workplaces. You agree to give up part of your pre-tax salary in exchange for a benefit provided by your employer. Common benefits include additional superannuation contributions, a car (under a novated lease), laptops, or childcare fees. The sacrificed amount is not counted as assessable income, which lowers your taxable income and the tax you pay.
The Australian Taxation Office (ATO) sets guidelines on what benefits are allowed and how they are valued. Not all benefits are treated equally; some, like super contributions, are taxed at 15% within the fund, while others may have fringe benefits tax (FBT) implications for the employer. It is important to check whether your employer offers salary sacrifice and whether your award or enterprise agreement permits it.
How salary sacrifice interacts with the national average line
The national full-time average line on this site is based on the ABS Average Weekly Earnings, May 2026, which measures gross ordinary-time earnings before any salary sacrifice or deductions. That figure is $2,083.70 per week, or about $108,352 per year. When you enter your salary into the tool, it compares your gross annual salary to that line. Salary sacrifice does not change your gross salary; it only changes how much of that salary is taxed. Therefore, your position on the line remains the same regardless of any salary sacrifice arrangement.
However, your take-home pay will be different because you receive benefits instead of cash. For example, if you earn the national average and sacrifice $10,000 into super, your taxable income drops to $98,352, but your gross salary for comparison is still $108,352. The line shows where your total remuneration sits relative to other full-time workers.
State and award differences
State full-time averages vary significantly. For instance, the Australian Capital Territory has the highest average at about $119,090, while Tasmania has the lowest at about $96,008. These differences reflect industry mix, cost of living, and local labour markets. Salary sacrifice is more common in certain sectors, such as public hospitals, universities, and non-profit organisations, which may be concentrated in particular states. However, the national average line is a single benchmark; your state average may be higher or lower, and salary sacrifice does not change that comparison.
Awards and enterprise agreements can also influence salary sacrifice. Some awards explicitly allow salary packaging for certain benefits, while others restrict it. The national minimum wage from 1 July 2026 is $26.44 per hour, or about $52,255 per year on a 38-hour week. Award minimums rose by 4.75% that year. If you are on an award, your minimum pay is set, but you may still be able to sacrifice part of your wage above the minimum. The line compares your total gross pay, not just the award rate.
Tax brackets and salary sacrifice
The 2026–27 resident tax rates are:
- Nil up to $18,200
- 15% from $18,201 to $45,000
- 30% from $45,001 to $135,000
- 37% from $135,001 to $190,000
- 45% above $190,000 Plus the Medicare levy of 2% (with reductions for low income).
Salary sacrifice can move you into a lower tax bracket if the sacrificed amount is large enough. For example, if your gross salary is $135,000 and you sacrifice $10,000, your taxable income becomes $125,000, keeping you in the 30% bracket instead of the 37% bracket. This can significantly reduce your tax bill. However, the line still shows your gross salary of $135,000, so you remain above the national average.
Medians and averages
It is important to distinguish between averages and medians. The national full-time average is $108,352, but the full-time median is about $90,532 (ABS Employee Earnings, August 2025). The all-employees median is about $74,100. The median is the middle point; half earn more, half earn less. Salary sacrifice does not affect these figures either, as they are based on gross earnings.
Men's full-time average is about $113,412, women's about $100,594. These gaps persist across states and industries. Salary sacrifice can be a tool to manage tax, but it does not change the underlying pay disparity.
Practical considerations
If you are considering salary sacrifice, check with your employer and review your award or agreement. Some benefits, like super contributions, are generally tax-effective. Others, like a car, may involve FBT and reduce your take-home pay differently. The ATO provides guidance on what is allowable.
Remember that the line on this site is a snapshot of gross ordinary-time earnings. It does not account for salary sacrifice, bonuses, overtime, or other allowances. For a full picture of your remuneration, consider both your gross salary and any packaged benefits.
For more on how the figures are set, see How the figures are set. For general guides on pay and conditions, visit Guides.