What is Salary Sacrifice?
Salary sacrifice is an arrangement between an employee and employer where the employee agrees to receive a lower gross salary in exchange for benefits provided by the employer. Common benefits include additional superannuation contributions, a car, or other fringe benefits. The ATO sets the rules for salary sacrifice, and it can affect your taxable income and the tax you pay. It is important to understand that salary sacrifice is not a salary figure itself but a way to structure your pay.
How Salary Sacrifice Relates to the National Full-Time Average
The national full-time adult ordinary-time average, as measured by the ABS Average Weekly Earnings for May 2026, is $2,083.70 per week, or about $108,352 per year. If you salary sacrifice part of your salary, your taxable income becomes lower than this figure. For example, if you earn the average and sacrifice $10,000 into super, your taxable income drops to $98,352. This can move you into a lower tax bracket. The full-time median is about $90,532, and the all-employees median is about $74,100 (ABS Employee Earnings, August 2025). So even after a modest sacrifice, you may still be above the median.
Tax Implications of Salary Sacrifice
The 2026–27 resident tax rates apply: 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, and 45% above $190,000. The Medicare levy is 2% before any reductions. Salary sacrifice reduces your taxable income, potentially lowering your marginal tax rate and the Medicare levy. For someone on the national average, sacrificing into super can be particularly effective because the contributions are taxed at 15% within the fund, which may be lower than your marginal rate.
Examples Using the On-Site Figures
Consider a full-time employee earning the national average of $108,352. If they salary sacrifice $15,000 into super, their taxable income becomes $93,352. This is above the full-time median of $90,532 but below the average. The all-employees median is $74,100, so the employee's taxable income is still well above that. Alternatively, an employee on the national minimum wage of $52,255 per year (from 1 July 2026, based on $26.44 per hour for 38 hours) might salary sacrifice a small amount, but their income is already low, so the tax benefit is limited. Award minimums rose 4.75% from 1 July 2026, so some employees may have slightly higher base rates.
State Comparisons
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, and Australian Capital Territory $119,090. Salary sacrifice can be more beneficial in higher-income states because the marginal tax rate is higher. However, the same rules apply nationally.
Internal Links
For more on how your salary compares to the national average, place a salary on the line. For guides on salary sacrifice and other topics, see our Guides.
Conclusion
Salary sacrifice is a legitimate way to reduce tax, but it requires careful planning. Always check the ATO rules and consider your personal circumstances. The figures on this site—such as the national full-time average of $108,352—can help you see where your pay sits and how salary sacrifice might change your taxable income.