Best salary sacrifice: how state and industry differences affect your choice

What is salary sacrifice?

Salary sacrifice is a common way to boost your take-home pay by redirecting part of your gross salary into benefits that are taxed less heavily. Instead of receiving cash and paying income tax on it, you receive a benefit – such as extra super contributions, a car, or a laptop – and the tax treatment is often more favourable. The key is to choose benefits that suit your income level, because the value of salary sacrifice depends heavily on your marginal tax rate.

In Australia, the national line for full-time adult ordinary-time earnings is set at an index of 100, which corresponds to $108,352 a year (based on ABS Average Weekly Earnings, May 2026). If your earnings are above that line, you are likely in the 37% or 45% tax bracket (plus 2% Medicare levy). That makes salary sacrifice into superannuation particularly attractive, because contributions are taxed at only 15% (or 30% if you exceed the concessional cap).

But the best salary sacrifice strategy isn't one-size-fits-all. Your state and industry can shift the calculation, because earnings vary widely across Australia. Let's look at how.

How state earnings affect your strategy

State indexes from the reference show clear differences. The ACT leads at 109.9 (annualised $119,090), followed by Western Australia at 106.9 ($115,825). At the other end, Tasmania sits at 88.6 ($96,008) and South Australia at 94.6 ($102,450). These numbers are gross ordinary-time benchmarks, not individual pay quotes, but they give a reliable picture of where typical full-time workers sit.

If you work in the ACT or WA, your earnings are likely above the national line. That means you are probably in the 37% tax bracket (or higher) on part of your income. Salary sacrificing into super – up to the concessional cap of $30,000 a year (2026–27) – saves you the difference between your marginal rate and the 15% contributions tax. For someone on the 37% rate, that's a 22% saving plus Medicare levy. Over a year, that can add up to thousands of dollars.

In Tasmania or South Australia, average earnings are below the national line. You might be in the 30% bracket or even the 15% bracket. The tax saving from super sacrifice is smaller, but still worthwhile if you are in the 30% bracket (saving 15%). Alternatively, you could look at FBT-exempt benefits like a laptop or portable electronic device. These are not subject to fringe benefits tax if used mainly for work, and they don't require a high income to be effective. For a Tasmanian retail worker earning around $96,000, a $2,000 laptop salary sacrificed could save about $600 in tax compared to buying it with after-tax dollars.

How industry pay levels change the picture

Industry indexes are even more varied. Mining tops the list at 154.7, meaning typical earnings are more than 50% above the national line. Professional services are at 114.7, education at 105.5. At the lower end, retail trade is 75.9 and accommodation and food services is 72.5.

If you work in mining, your gross earnings are likely well above $150,000. You are in the top tax bracket (45% plus 2% Medicare levy). Salary sacrificing into super is a no-brainer: you save 30% on every dollar contributed (45% + 2% minus 15%). You could also consider a novated lease for a car, which bundles running costs and FBT into a pre-tax salary deduction. For a high earner, the tax savings can make a luxury car affordable.

In retail or hospitality, earnings are below the national line. The tax benefit from super sacrifice is smaller, but still positive if you are in the 30% bracket. However, you need to be careful: salary sacrifice reduces your gross salary for the purpose of the super guarantee, so your employer's compulsory 12% contribution is calculated on a lower figure. That can reduce your overall retirement savings if you don't compensate with the sacrificed amount.

Practical examples

Let's put it together. Consider a mining engineer in Western Australia earning $160,000 a year. The state index is 106.9, industry index 154.7. She decides to salary sacrifice $20,000 into super. Her taxable income drops to $140,000, saving her $9,400 in tax (45% + 2% on the top $20,000, minus 15% contributions tax). Her take-home pay increases by about $780 a month. That's a strong result.

Now consider a retail assistant in Tasmania earning $65,000 a year. State index 88.6, industry index 75.9. She is in the 30% tax bracket. If she salary sacrifices $5,000 into super, she saves $850 in tax (30% + 2% minus 15%). That's still worthwhile, but she might prefer to salary sacrifice a laptop for work, which is FBT-exempt. The laptop costs $2,000; by salary sacrificing, she avoids paying tax on that $2,000, saving $640. Plus she gets the laptop without dipping into after-tax income.

Key considerations

Before setting up a salary sacrifice arrangement, check your award or enterprise agreement. Some awards restrict salary sacrifice or require employer consent. Also remember that salary sacrifice reduces your gross salary for the super guarantee, so your employer's compulsory contributions will be lower. You can offset this by sacrificing into super, but it's a balancing act.

For more on how earnings compare across Australia, see the Salary Index and explore states and industries. If you want to understand how the index is calculated, read how the index works. And for broader pay topics, visit topics.

Finally, talk to a tax professional or your employer's HR team. The best salary sacrifice depends on your exact income, your employer's policies, and your long-term goals. But by understanding where your earnings sit on the national index, you can make a more informed choice.