How NSW Health salary packaging affects your take-home pay compared to the national average

What is NSW Health salary packaging?

NSW Health salary packaging is a tax-effective arrangement that lets you swap part of your before-tax salary for non-cash benefits like mortgage payments, car leasing, or electronic devices. Because the packaged amount is taken out of your gross pay before PAYG tax is calculated, you pay less income tax. The result is more money in your pocket each pay cycle.

This scheme is available to most NSW Health employees, but the exact benefits depend on your award coverage and the type of benefits you choose. The key rule is that the total value of packaged benefits must stay within the fringe benefits tax (FBT) exemption cap to avoid extra tax.

How does it compare to the national salary index?

The Salary Index sets 100 as the national full-time adult ordinary-time earnings, which is $108,352 per year (based on ABS Average Weekly Earnings, May 2026). NSW has an index of 101.2, meaning the average NSW full-time worker earns slightly above the national line. The health care and social assistance industry sits at 97.8, a touch below the national average.

Salary packaging doesn't change your gross salary for index purposes – your award rate remains the same. But it can lift your effective take-home pay well above what the gross index suggests. For example, a health professional on $80,000 gross who packages $9,009 worth of benefits could save around $2,700 in tax (at the 30% marginal rate), making their after-tax income equivalent to someone earning $82,700 without packaging.

State and industry differences

NSW Health employees benefit from a state-specific salary packaging policy that is more generous than many private sector arrangements. The FBT exemption cap of $17,000 grossed-up (actual value $9,009) is set by the Australian Taxation Office but applied through NSW Health Policy Directive PD2018_044. This cap is not pro-rated for part-year employees.

Other states have similar schemes for public health workers, but the share of tax savings and administration fees can vary. In NSW, from November 2024, eligible HSU award employees receive 100% of the tax savings – a significant improvement over the previous 70% split. This change was a government election commitment aimed at low-income health workers.

Industry-wise, health care and social assistance has an index of 97.8, slightly below the national average. However, salary packaging can narrow the gap in real terms. For instance, a nurse on $75,000 gross (index ~69) who packages $9,009 could see their effective after-tax income rise to the equivalent of $77,700 gross, pushing their index closer to 72. That's still below the national line, but the packaging helps.

How salary packaging works in practice

Under the Health Professional Salaries (State) Award 2025, you can elect to package part or all of your salary, up to 100% when combined with salary sacrifice to superannuation. The packaged amount reduces your salary subject to PAYE tax. Your employer deducts the benefit cost, administration fee, and any employer share of tax savings from your pre-tax dollars.

If you choose benefits that are exempt from FBT (like those under the cap), you avoid FBT entirely. If you exceed the cap, the employer pays FBT but passes the cost to you. That's why most employees stay within the $9,009 actual benefit limit.

Tax savings and your take-home pay

Let's look at a concrete example. Suppose you're a NSW Health employee earning $90,000 a year. You decide to salary package $9,009 in mortgage payments. Your taxable salary drops to $80,991. At the 2026–27 tax rates (30% marginal rate for that bracket), you save about $2,703 in tax. Your take-home pay after tax and Medicare levy (2%) would be roughly $63,500 instead of $60,800 – an extra $2,700 in your pocket.

That extra $2,700 is equivalent to earning a gross salary of about $92,700 without packaging. In index terms, your effective income jumps from 83.1 to 85.6, moving closer to the NSW average of 101.2.

Who can use salary packaging?

Most NSW Health employees are eligible, but the share of tax savings you receive depends on your award. Employees under HSU-covered awards (including many allied health, nursing, and administrative roles) now get 100% of the savings. Those under other awards or agreements may receive a lower share, typically 70%. Check your award or agreement to confirm.

You can also combine salary packaging with salary sacrifice to superannuation. The total sacrificed and packaged amount cannot exceed 100% of your salary, but you can allocate as you wish. Super contributions are not subject to FBT, so they don't count toward the $9,009 cap.

Important considerations

• Salary packaging does not reduce your superannuation guarantee (12% from 1 July 2026) or your award entitlements like leave loading.
• Pre-tax and post-tax deductions (e.g., HECS, child support) must be taken into account before packaging.
• If you leave the scheme, you may need to pay out any novated lease obligations.
• The FBT exemption cap is per FBT year (1 April to 31 March), not per financial year.

For more on how your pay compares across Australia, see our states and industries pages. You can also browse pay guides for award-specific rates.

The bottom line

NSW Health salary packaging is a valuable way to reduce tax and increase your effective income. While the gross salary index for health care is slightly below the national average, packaging can bring your take-home pay closer to or even above the line. The recent change giving HSU award employees 100% of tax savings makes it even more attractive. If you're eligible, it's worth exploring how much you could save.