Understanding salary sacrifice tax and the national average
When you enter a salary sacrifice arrangement, you trade part of your pre-tax pay for a benefit. The amount you sacrifice is not included in your assessable income for tax purposes, which can lower the tax you owe. But how does this affect where your pay sits against 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 (multiplied by 52). This figure is based on gross earnings before any salary sacrifice deductions. The ABS collects data on ordinary-time earnings from employers, and those earnings are reported as the total remuneration before any voluntary reductions for benefits.
What salary sacrifice means for your comparison
If your employment contract states a gross salary of $120,000, and you salary sacrifice $15,000 into superannuation, your taxable income becomes $105,000. However, the figure used to compare against the national average remains $120,000. The ABS average is not adjusted for salary sacrifice. So you would be above the average of $108,352, even though your taxable income is below it.
This distinction is important when you place a salary on the line to see how it compares. The tool on this site uses the gross annual salary before tax and before any sacrifice. It then shows the weekly and hourly equivalents on a 38-hour week, plus the distance from the full-time average.
Tax brackets and salary sacrifice
The ATO sets the resident tax rates for 2026–27 as follows:
- Nil on income up to $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% (with possible reductions). Salary sacrifice reduces the income that falls into these brackets, potentially lowering your overall tax. However, the gross salary remains the benchmark for the national average.
Medians and minimum wage context
The full-time median salary, from the ABS Employee Earnings survey (August 2025), is about $90,532 per year. The all-employees median is about $74,100. These medians are also based on gross earnings before sacrifice. 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. Award minimums rose by 4.75% from that date.
Salary sacrifice is more common among higher-income earners, but it is available to many employees under certain conditions. The ATO provides guidelines on what can be sacrificed and the FBT implications for employers.
State averages and salary sacrifice
State full-time averages vary, and salary sacrifice does not change the gross figure used for these comparisons either. For example:
- 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
If you work in Western Australia, the state average is higher than the national average. Salary sacrifice does not move your gross salary relative to these benchmarks.
How the figures are set
The ABS calculates Average Weekly Earnings from a survey of employers. They ask for gross ordinary-time earnings for full-time adult employees, excluding overtime and before any deductions like salary sacrifice. This is why the figure is consistent regardless of individual sacrifice arrangements. For more detail, see how the figures are set.
Practical considerations
When you compare your salary to the national average, always use the gross amount before any sacrifice. If you are considering salary sacrifice, remember that it does not improve your position relative to the average—it only reduces your taxable income. The line on this site shows where your gross salary sits, and that is the figure that matters for benchmarking.
In summary, salary sacrifice tax arrangements are a way to reduce your tax bill, but they do not change the salary figure used to compare against the national full-time average of $108,352. Your gross salary is the number that counts for that comparison.