What Is a Salary Sacrifice?
A salary sacrifice arrangement is a formal agreement between you and your employer where you give up part of your pre-tax salary in exchange for benefits. Common benefits include a car, additional superannuation contributions, laptops, or childcare. The Australian Taxation Office (ATO) sets the rules for salary sacrifice, and it must be genuine – you cannot simply swap salary for cash or benefits that are not allowed.
Under a salary sacrifice, your employer reports your gross salary (the total package before any sacrifice) for superannuation guarantee purposes, but your taxable income is reduced by the value of the sacrificed benefits. This can lower the amount of tax you pay, but it does not change the gross salary figure that the ABS uses to calculate the national full-time average.
How the National Average Is Set
The national full-time adult ordinary-time average is $2,083.70 per week, or about $108,352 per year, according to the ABS Average Weekly Earnings for May 2026. This figure is based on gross earnings before any deductions, including salary sacrifice amounts. The ABS defines ordinary-time earnings as earnings before taxation and other deductions, so salary sacrifice is already included in the average.
The site also provides medians: the full-time median is about $90,532, and the all-employees median is about $74,100 (ABS Employee Earnings, August 2025). These are different from the average and give a sense of the middle of the pay distribution.
State full-time averages vary significantly. For example, the Australian Capital Territory has the highest at about $119,090, while Tasmania has the lowest at about $96,008. Other states include New South Wales ($109,658), Victoria ($106,137), Queensland ($106,064), South Australia ($102,450), Western Australia ($115,825), and the Northern Territory ($103,173). These differences reflect industry mix, cost of living, and local labour markets.
Why State and Award Differences Matter for Salary Sacrifice
Your award or enterprise agreement may have specific rules about salary sacrifice. For instance, some awards allow salary sacrifice for certain benefits, but the gross salary must still meet the minimum wage or award rate. 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 the previous year.
If you work in a state with a high average, like the ACT, your gross salary might be well above the national line. But if you salary sacrifice a large portion, your taxable income could drop below the national average. However, the comparison on this site uses your gross salary, not your taxable income. So you should enter the full amount before any sacrifice.
Similarly, if you are on an award that mandates a certain minimum, salary sacrifice cannot reduce your gross pay below that minimum. This ensures that your base pay remains compliant with Fair Work requirements.
Using the Tool on This Site
When you Place a salary on the line, you enter your yearly salary before tax. The tool then calculates your weekly and hourly pay based on a 38-hour week, and shows how far you are from the national full-time average. If you have a salary sacrifice arrangement, enter your gross salary – the amount before any benefits are taken out. Otherwise, your comparison will be misleading, because the national average includes salary sacrifice amounts.
For a deeper look at how pay varies by location, see our States and territories page. You can also explore How the figures are set to understand the methodology behind the averages and medians.
Tax Implications of Salary Sacrifice
Salary sacrifice reduces your taxable income, which can lower the tax you pay. For the 2026–27 income year, 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; and 45% above $190,000. The Medicare levy of 2% applies before any reductions. By sacrificing part of your salary into super, for example, you may reduce your taxable income and pay less tax, but your gross salary remains the same for the purposes of the national average.
Conclusion
Salary sacrifice is a useful way to reduce your tax bill, but it does not change the gross salary that the ABS uses to calculate the national full-time average. When comparing your pay to the line on this site, always use your gross salary before any sacrifice. State and award differences can also affect where your pay sits, so consider both your location and your industrial instrument when interpreting the results.