Salary sacrifice fuel card: how it affects your pay on the salary index

What is a salary sacrifice fuel card?

A salary sacrifice fuel card is an arrangement where your employer allows you to use part of your pre-tax salary to pay for fuel for your personal or work vehicle. Instead of receiving that money as cash wages, it goes directly to the fuel card provider. This reduces your taxable income, so you pay less income tax and Medicare levy. The fuel card is a common benefit in industries where driving is a big part of the job, such as mining, sales, and trades.

How it affects your salary index

The Salary Index measures your gross ordinary-time earnings against the national line of $108,352 per year (index 100). This gross figure is your pay before any deductions like tax, super, or salary sacrifice. A salary sacrifice fuel card does not change your gross earnings – your employer still reports the same base salary to the Australian Bureau of Statistics. So your index number stays the same whether you use a fuel card or not.

What does change is your take-home pay. Because the sacrificed amount is not taxed, you keep more of what you earn. For example, if you earn $108,352 (index 100) and sacrifice $5,000 for fuel, your taxable income drops to $103,352. Using the 2026–27 tax rates (including 2% Medicare levy), you would save roughly $1,500 in tax compared to receiving the $5,000 as cash. That extra net income can be significant, especially if you drive often.

Where does this sit on the index?

Since the index is based on gross pay, the fuel card itself doesn't move your index. But the type of job that offers a fuel card often pays above the national line. For instance, the mining industry has an index of 154.7 (annualised $167,600). A mining employee on that gross salary who uses a salary sacrifice fuel card would still have an index of 154.7, but their effective net income would be higher than someone in a lower-taxed role.

On the other hand, a retail worker earning the national minimum wage ($52,255, index 48.2) is unlikely to have a fuel card benefit, as the cost would eat too much of their already low pay. The pay guides for different industries can help you see typical earnings and benefits.

Example with national benchmarks

Let’s compare two full-time workers on the same gross salary of $80,000 (index 73.8, below the national line). Worker A takes the full $80,000 as cash. Worker B salary sacrifices $4,000 for a fuel card, so taxable income is $76,000.

• Worker A: tax on $80,000 (2026–27) = $5,092 + 30% on ($80,000 – $45,000) = $5,092 + $10,500 = $15,592. Plus Medicare $1,600. Total tax $17,192. Net = $62,808.
• Worker B: tax on $76,000 = $5,092 + 30% on ($76,000 – $45,000) = $5,092 + $9,300 = $14,392. Plus Medicare $1,520. Total tax $15,912. Net = $60,088 cash plus $4,000 fuel = $64,088 total benefit. Worker B is $1,280 better off.

This shows how a fuel card can boost your effective income without changing your index. The index remains 73.8 for both.

Considerations and rules

Salary sacrifice fuel cards are subject to fringe benefits tax (FBT) if the fuel is for personal use. Many employers use an “exempt” arrangement for work-related travel, but you need to keep logbooks. The Australian Tax Office has strict guidelines. Also, salary sacrifice reduces your gross income for some purposes, like the super guarantee (though your employer must pay super on your ordinary-time earnings, not the sacrificed amount). Check your award or enterprise agreement – some awards limit salary sacrifice.

Your state can also affect your index. For example, Western Australia has an index of 106.9, while Tasmania is 88.6. A fuel card benefit in WA might be more common given the higher mining wages.

Bottom line

A salary sacrifice fuel card is a tax-effective way to pay for fuel, but it doesn’t change your position on the salary index. Your index is based on gross ordinary-time earnings. To see where your pay sits, use the Salary Index calculator. For more on how benefits like this interact with awards, see our topics page.