Understanding Salary Sacrifice Schemes
A salary sacrifice scheme (also called salary packaging) is an arrangement where you agree to forgo part of your pre-tax salary in exchange for benefits such as additional superannuation contributions, a car, or electronic devices. The sacrificed amount is not subject to income tax, which can reduce your taxable income and increase your take-home pay, depending on the benefit type and your marginal tax rate.
This article explains how salary sacrifice interacts with the national full-time average earnings, tax brackets, and minimum wage, using figures from the ABS, Fair Work, and the ATO.
How Salary Sacrifice Affects Your Reported Earnings
When you enter a salary sacrifice scheme, your gross salary as reported to the Australian Bureau of Statistics (ABS) may be lower than your total remuneration package. However, the ABS Average Weekly Earnings measure includes salary-sacrificed amounts as part of total earnings, so the national full-time average already reflects such arrangements. 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).
If you sacrifice a portion of your salary, your taxable income decreases, but your total remuneration (including the benefit) may still be above or below the average. For example, if your base salary is $120,000 and you sacrifice $15,000 into super, your taxable income becomes $105,000, which is below the full-time average of $108,352. Your take-home pay after tax will be higher than if you had received the $15,000 as cash, because you avoid paying tax on that amount.
Comparing Take-Home Pay with the National Average
To see where your pay sits, consider the full-time average of $108,352 per year. The site also shows the full-time median of about $90,532 and the all-employees median of about $74,100 (ABS Employee Earnings, August 2025). Men's full-time ordinary-time average is about $113,412; women's is about $100,594.
Using the 2026–27 tax rates (resident):
- Nil tax on first $18,200
- 15% on income from $18,201 to $45,000
- 30% on income from $45,001 to $135,000
- 37% on income from $135,001 to $190,000
- 45% on income above $190,000 Plus the Medicare levy of 2% (subject to reductions).
For someone earning the full-time average of $108,352, the tax (including Medicare) would be approximately:
- Tax on $108,352: $0 on first $18,200, then 15% on $26,800 = $4,020, then 30% on $63,352 = $19,005.60, total $23,025.60, plus Medicare 2% = $2,167.04, total $25,192.64. Take-home pay about $83,159 per year, or $1,599 per week.
If you salary sacrifice $15,000 into super, your taxable income becomes $93,352. Tax: $0 on $18,200, 15% on $26,800 = $4,020, 30% on $48,352 = $14,505.60, total $18,525.60, plus Medicare 2% = $1,867.04, total $20,392.64. Take-home pay about $72,959 per year, or $1,403 per week. But you also have $15,000 in super (taxed at 15% within the fund). Your total benefit (take-home plus super) is higher than if you had taken the cash.
State Averages and Salary Sacrifice
Your take-home pay relative to state averages also matters. The site provides state full-time averages: New South Wales $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. Salary sacrifice can help you align your taxable income with these benchmarks, but your total remuneration package may exceed them.
For more details on how your salary compares across regions, see States and territories.
Salary Sacrifice and the Minimum Wage
Fair Work sets the national minimum wage from 1 July 2026 at $26.44 per hour, $1,004.90 per week, or about $52,255 per year on a 38-hour week. Award minimums rose by 4.75%. Salary sacrifice cannot reduce your cash wages below the minimum wage. If your base salary is already near the minimum, sacrificing additional amounts may not be possible without breaching this floor.
Practical Considerations
- Fringe Benefits Tax (FBT): Some benefits (e.g., cars) may attract FBT, which your employer may pass on. This can reduce the net benefit.
- Superannuation: Salary sacrifice into super is generally tax-effective, as contributions are taxed at 15% instead of your marginal rate.
- Reportable employer super contributions: These appear on your payslip and may affect government benefits or the Medicare levy surcharge.
For a deeper look at how different occupations and industries compare, see Job medians and Industry medians.
Summary
A salary sacrifice scheme can lower your taxable income, potentially increasing your take-home pay and reducing your tax bill. However, your total remuneration package (including benefits) may still be above or below the national full-time average of $108,352. Use the site's line to see where your pay sits, and consider the tax brackets and minimum wage when structuring your arrangement.
For more on how the figures are set, visit How the figures are set.