How salary packaging can boost your take-home pay
Your take-home pay after salary packaging depends on your salary, the benefits packaged, and your tax situation – it can be higher than without packaging.
How salary packaging affects your take-home pay
Salary packaging (also called salary sacrifice) lets you swap part of your pre-tax salary for benefits your employer pays for. Because you pay less income tax on a lower taxable income, your take-home can increase – even after accounting for the cost of the benefits.
What is salary packaging?
As the [] explains, you and your employer agree that you'll receive less salary before tax, and in return your employer pays for certain benefits of similar value. This reduces your taxable income, meaning you pay less tax. Common benefits include cars, electronic devices, and super contributions.
How does it reduce tax?
Your taxable income is your salary minus the salary sacrifice amount. For example, the ATO shows a scenario where an employee earning $65,000 packages a car worth $17,353. Their taxable income drops to $47,647, saving thousands in tax. However, the benefit is subject to fringe benefits tax (FBT) for your employer, which may limit what's offered.
Medicare levy considerations
Even with salary packaging, you still pay the Medicare levy (2% of your taxable income. The [] notes that the levy is charged on your taxable income. If your taxable income falls below $28,011 (single), you may not pay the levy; between $28,011 and $35,013, a shading applies. But for most full-time workers, the full 2% applies.
Superannuation and salary sacrifice
Salary sacrificing into super is a popular option. Your employer pays these contributions to your super fund, and they are taxed at 15% inside the fund. Importantly, your employer must still pay the super guarantee (12% from 1 July 2026) on your original salary, not the sacrificed amount. The concessional contributions cap for 2026-27 is $32,500 (including your employer's super guarantee and salary sacrifice).
Example: Car packaging
The ATO provides a detailed example for a $65,000 salary with a car benefit. Without packaging, your net disposable income after tax, Medicare, and car expenses is $41,912. With packaging and an employee contribution, it rises to $43,593. This shows the potential benefit.
Setting up salary packaging
You must arrange the salary sacrifice before you earn the income. It cannot be applied retroactively. Your employer must agree, and you cannot access the sacrificed salary. Check with your employer's HR or payroll team about available benefits.
Impact on government benefits
Salary packaging reduces your taxable income, which may affect eligibility for family tax benefits, child support, and the Medicare levy surcharge. Consider these before entering an arrangement.
Further reading
For more details, see our Salary packaging guide and Tax and Medicare page. You can also use our Take-home pay calculator to estimate your after-tax income.
Questions
What is salary packaging?
Salary packaging, also known as salary sacrifice, is an agreement with your employer to receive less pre-tax salary in exchange for benefits like a car or super contributions. This reduces your taxable income, so you pay less tax. Most benefits are subject to fringe benefits tax (FBT) for your employer.
Does salary packaging affect my super?
Yes, salary sacrificed super contributions are treated as employer contributions and taxed at 15% in your super fund. They are additional to your super guarantee. They count towards the concessional contributions cap of $32,500 (including your employer's super guarantee and salary sacrifice).
Can I salary package anything?
There is no restriction on the types of benefits, but your employer decides what to offer. Common benefits include cars, laptops, and super. Most benefits are subject to fringe benefits tax (FBT) for your employer.