How retirement savings salary sacrifice affects your pay across states and industries

How retirement savings salary sacrifice fits into your pay picture

Retirement savings salary sacrifice is a way to boost your super by directing some of your before-tax income into your fund. It’s a common strategy, but how it affects your pay depends on where you work, what industry you’re in, and your personal tax situation. This article explains the basics and shows how state and industry differences change the numbers.

The national benchmark for full-time adult ordinary-time earnings is set at an index of 100, which corresponds to $2,083.70 per week or $108,352 per year (annualised) according to the Australian Bureau of Statistics. Your own pay figure can be compared to that line. If you earn exactly that amount, your index is 100. If you earn more, your index is above 100; if less, below 100. State and industry indices give a quick way to see how typical pay in your area or sector compares.

What is retirement savings salary sacrifice?

Salary sacrifice is a voluntary agreement with your employer. You ask your employer to pay part of your salary into your super fund instead of giving it as cash. The key benefit is tax savings. The amount you sacrifice reduces your assessable income. For 2026–27, the tax brackets: nil up to $18,200, 15% up to $45,000, 30% up to $135,000, 37% up to $190,000, 45% above. Plus Medicare levy 2%. Super contributions are taxed at 15% (concessional rate) up to the cap. So if you are in the 30% bracket, you save 15% tax on each dollar sacrificed (30% minus 15%). You also reduce your Medicare levy because your income drops.

But your take-home pay goes down. For example, if you earn $100,000 and sacrifice $10,000, your taxable income becomes $90,000. You pay less tax, but you receive less cash each pay. The super guarantee (12% from July 2026) is paid on your ordinary-time earnings, not on the sacrificed amount unless your employer agrees to include it. Many employers pay the SG on the salary after sacrifice, so your total super contributions may not increase as much as you expect.

State differences in pay and salary sacrifice

State indices show how average pay varies. For example, the Australian Capital Territory has the highest index at 109.9 (annualised $119,090), while Tasmania is lowest at 88.6 ($96,008). Workers in high-index states have more room to sacrifice because their base pay is higher. A worker in ACT earning $119,090 could sacrifice $10,000 and still have a taxable income of $109,090, staying in the 30% bracket. A worker in Tasmania earning $96,008 who sacrifices $10,000 drops to $86,008, which is still in the 30% bracket but closer to the $45,000 threshold. The tax benefit is similar, but the lower base means less disposable income after sacrifice.

State differences also affect the super guarantee. The SG is 12% of ordinary-time earnings. In a high-index state, the compulsory super contribution is larger in dollar terms. If you sacrifice additional amounts, your total super can grow faster. But if your employer calculates SG on the reduced salary, you might lose some compulsory contributions. Check your award or agreement.

Industry differences and salary sacrifice

Industry indices show even wider gaps. Mining is the highest at 154.7 (annualised $167,600), while accommodation and food services is lowest at 72.5 ($78,555). A miner earning $167,600 who sacrifices $20,000 drops to $147,600, still in the 37% bracket (up to $190,000). The tax saving is 22% (37% minus 15%). A retail worker (index 75.9, annualised $82,200) sacrificing $10,000 drops to $72,200, staying in the 30% bracket. The tax saving is 15%. The miner gets a bigger absolute tax saving and can sacrifice more without hitting the concessional cap ($27,500 for 2026–27).

Low-paying industries may not have much room to sacrifice without affecting living expenses. The national minimum wage is $26.44 per hour, annualised $52,255 (index 48.2). A full-time worker on that wage cannot afford to sacrifice much. Salary sacrifice is most beneficial for higher earners.

How the salary index helps you compare

The salary index is your yearly gross pay divided by the national line ($108,352) times 100. For example, if you earn $130,000, your index is 120. That tells you you’re 20% above the average. You can then compare with your state or industry index. If you work in mining in Western Australia, your personal index might be well above the national average. Salary Index gives you the baseline. States and industries show typical figures. How the index works explains the calculation.

Practical considerations

Before starting salary sacrifice, check your award or enterprise agreement. Some awards limit salary sacrifice or require employer consent. Also consider the super guarantee: if your employer calculates SG on your reduced salary, you may lose some compulsory contributions. The ATO rules allow you to salary sacrifice up to the concessional cap, but any excess is taxed at your marginal rate.

For example, a professional in professional, scientific and technical services (index 114.7, annualised $124,300) might sacrifice $10,000. Their taxable income becomes $114,300, saving $1,500 in tax (15% of $10,000) plus Medicare levy reduction. Their take-home pay drops by about $8,500 after tax savings. The super fund gets $10,000 plus earnings.

A worker in education and training (index 105.5, annualised $114,300) would see similar numbers. But a worker in health care and social assistance (index 97.8, annualised $106,000) earning slightly below the national line might sacrifice less to avoid dropping below the $45,000 threshold.

Conclusion

Retirement savings salary sacrifice can be a smart way to build super, but its impact on your pay depends on your state and industry. High-index states and industries give you more headroom and larger tax savings. Low-index ones offer less benefit. Always check your specific situation with a tax professional. For more on pay comparisons, see pay guides and topics.