Compare job offers with smart salary packaging: focus on take-home pay
Your take-home pay depends on your salary, tax bracket, and any salary packaging arrangements. Smart salary packaging can reduce taxable income, but you need to consider the net effect on your bank account.
How to compare job offers using take-home pay
When you receive a job offer, the headline salary is only part of the picture. What matters is the amount that reaches your bank account after income tax and the Medicare levy. Smart salary packaging can change that amount significantly, so you need to compare offers on an after-tax basis.
Step 1: Know your base salary and tax
Start with the annual salary figure. For 2026–27, the tax rates are:
- Nil on the first $18,200
- 15c per $1 from $18,201 to $45,000
- 30c per $1 from $45,001 to $135,000
- 37c per $1 from $135,001 to $190,000
- 45c per $1 above $190,000
Add the Medicare levy of 2% on taxable income. For single people, the latest published thresholds are $28,011 and $35,013. If your taxable income is between these amounts, the levy is reduced by 10c per $1 over the lower threshold. Above $35,013, you pay the full 2%.
Use our Tax and Medicare guide to estimate your tax and levy. Remember that the Low Income Tax Offset (LITO) can reduce tax for incomes up to $66,667, but it cannot reduce tax below zero.
Step 2: Factor in salary packaging
Smart salary packaging – also called salary sacrificing – lets you use part of your pre-tax salary to pay for approved benefits. The Australian Taxation Office explains that this reduces your taxable income, meaning you may pay less tax. Common benefits include cars, super contributions, and work-related items (though from 1 April 2027 work-related items will no longer be exempt from FBT).
notes that salary packaging is usually more effective for people on middle to high incomes because their marginal tax rate is higher. However, your employer may have to pay fringe benefits tax (FBT) on packaged benefits, which can reduce the savings. Some employers ask you to make an employee contribution to lower their FBT.
For example, the ATO shows a scenario where Sam earns $65,000. Without packaging, Sam’s net disposable income is $41,912. With a car benefit and employee contributions, it rises to $43,593. That’s a real increase in take-home pay.
Step 3: Calculate after-tax and Medicare
To compare offers, you need to estimate your take-home pay under each scenario. Start with the base salary, subtract any salary sacrifice amount, then apply tax and Medicare. Add back any employee contributions you make (since those are after-tax).
Our Take-home pay tool can help. Enter the salary and any packaging details to see the net amount per fortnight. Remember that super contributions are taxed at 15% inside the fund, but they reduce your taxable income now.
Step 4: Use our tools
We provide several resources to help you compare:
- Salary packaging guide – explains benefits and FBT
- Take-home pay calculator – estimate your net pay
- Benchmarks – see how offers compare to national averages
The national minimum wage is $26.44 per hour and $1,004.90 per week (from 1 July 2026). The average full-time adult ordinary time earnings are $2,083.70 per week (ABS May 2026). Use these as reference points.
Final tip: ask the employer
When you receive an offer, ask the employer what salary packaging options are available. Ask whether the employer pays FBT or expects employee contributions. Then run the numbers. Smart salary packaging can boost your take-home pay, but only if the arrangement is structured well.
Remember that this guide provides estimates only. For a full assessment, consult a tax professional. The Australian Taxation Office and are reliable sources for current rules.
Questions
How does salary packaging affect my take-home pay?
Salary packaging reduces your taxable income by using pre-tax dollars to pay for benefits like a car or super. This lowers the tax and Medicare levy you pay, so your net pay can increase. However, your employer may pass on fringe benefits tax, and you may need to make employee contributions. Use a calculator to estimate.
What is the Medicare levy and how is it calculated?
The Medicare levy is 2% of your taxable income. For single people, there is a shading threshold: if your taxable income is between $28,011 and $35,013, the levy is reduced. Above $35,013, you pay the full 2%. Salary packaging reduces your taxable income, which can lower your Medicare levy.
Should I consider salary packaging when comparing job offers?
Yes, because two jobs with the same base salary can result in different take-home pay if one offers salary packaging. For example, packaging a car or super can save you tax. But check if the employer offers packaging and what benefits are available. Use our Salary packaging guide to compare.