What is Salary Packaging?
Salary packaging is a way to structure your pay that can change how much tax you pay and how your salary compares to the national full-time average. Instead of receiving all your pay as cash, you agree with your employer to sacrifice part of your pre-tax salary in exchange for benefits. Common examples include a car, laptop, super contributions, or even school fees. The packaged amount is deducted from your gross salary before tax is calculated, so your taxable income is lower.
How Salary Packaging Works
When you salary package, your employer reduces your cash salary by the value of the benefit. For instance, if your annual salary is $108,352 (the national full-time average from the ABS Average Weekly Earnings, May 2026) and you package a car worth $10,000, your taxable salary becomes $98,352. You still receive the car as a benefit, but you pay less income tax because your taxable income is lower. The benefit itself may also be subject to fringe benefits tax (FBT), which your employer usually pays.
Salary Packaging and the National Average
The national full-time average salary is $108,352 a year, or $2,083.7 a week (based on a 38-hour week). This is the line on the site. When you salary package, your reported salary before packaging is still that amount, but your taxable income drops. The site shows your yearly salary before tax, not after packaging. So if you package, your position on the line may appear higher than your taxable income. The median full-time salary is about $90,532 (ABS Employee earnings, August 2025), and the all-employees median is about $74,100. The national minimum wage from 1 July 2026 is $26.44 an hour, $1,004.9 a week, about $52,255 a year. Salary packaging can be used by anyone, but it is most beneficial for higher earners because the tax savings are larger at higher marginal rates.
Types of Salary Packaging
Common salary packaging benefits include:
- Car: A novated lease where you lease a car with pre-tax dollars.
- Superannuation: Additional contributions to your super fund, which are taxed at 15% instead of your marginal rate.
- Laptop or phone: Work-related devices.
- School fees: In some not-for-profit sectors, you can package school fees.
- Meal and entertainment cards: Often available in hospitality or health.
Each benefit has different rules and caps set by the ATO. For example, the cap for car fringe benefits is $5,000 for private companies. Not-for-profit organisations often have higher caps, such as $15,900 for public benevolent institutions.
Tax Implications
Salary packaging reduces your taxable income, so you pay less tax under the 2026–27 resident tax rates: nil up to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000, and 45% above that. The Medicare levy of 2% also applies. For someone earning the national average of $108,352, packaging $10,000 could save about $3,000 in tax (30% bracket). However, the benefit itself may attract FBT, which your employer pays. Some benefits are exempt from FBT, such as super contributions up to the concessional cap ($27,500 in 2026–27).
State Differences
Salary packaging is available across Australia, but state averages vary. The national full-time average is $108,352, but state averages range from $96,008 in Tasmania to $119,090 in the ACT. If you work in a state with a higher average, you may be in a higher tax bracket, making packaging more valuable. For example, in Western Australia (average $115,825), packaging can save more tax than in Tasmania.
How to Use Salary Packaging
To start salary packaging, you need your employer to offer it. Many large companies and not-for-profits do. You choose a benefit and sign an agreement. The amount you sacrifice is deducted from your pay before tax. Your employer reports the benefit to the ATO. You should check the caps and rules for your specific benefit. The ATO provides guidelines, but your employer's payroll team can help.
Salary Packaging vs. Other Pay Structures
Salary packaging is different from salary sacrifice for super, which is a common way to boost retirement savings. It is also different from a pay rise or bonus. The site shows your yearly salary before tax, so packaging does not change that figure. However, your take-home pay may be higher because you pay less tax. The site also shows your weekly and hourly equivalents on a 38-hour week, and how far you are from the national full-time average. If you package, your position on the line may shift if you consider taxable income, but the site uses your gross salary.
Conclusion
Salary packaging is a legitimate way to reduce your tax and get benefits you would otherwise buy with after-tax dollars. It can make your pay go further, especially if you earn near the national average. Check with your employer and the ATO for current caps. For more on how the figures are set, see [How the figures are set](/data]. To place your salary on the line, see [Place a salary on the line](/line]. The site uses ABS, Fair Work, and ATO data.
See where a figure sits on the average line, and read the data notes for the series behind it.