How salary sacrifice travel expenses affect your take-home pay when comparing job offers

Comparing job offers with salary sacrifice travel expenses

When you read a job ad, the headline salary is only part of the story. Some employers offer salary sacrifice travel expenses as a way to boost your effective take-home pay without increasing your gross salary. Understanding how this works against the national earnings index can help you compare offers fairly.

What is salary sacrifice travel expenses?

Salary sacrifice (also called salary packaging) is an agreement where you give up part of your pre-tax salary in return for a benefit your employer pays for. Travel expenses commonly include:

• Car parking
• Public transport fares
• Car lease payments (novated lease)
• Tolls and fuel (under a novated lease)

Because the sacrificed amount is taken from your gross pay before tax, your taxable income falls. You pay less income tax and Medicare levy, but the employer may have to pay fringe benefits tax (FBT) on the benefit. Some travel benefits are FBT-exempt, such as public transport provided by the employer or certain car parking at or near work.

How does it affect your pay compared to the national index?

The Salary Index benchmarks full-time adult ordinary-time earnings at 100, which is $108,352 a year (based on ABS Average Weekly Earnings, May 2026). If a job ad offers a base salary of $90,000, that’s an index of 83.1. But if the same offer includes salary sacrifice travel expenses worth, say, $10,000 a year in pre-tax value, your effective income could be higher than the base suggests.

For example, if you are a resident earning $90,000 and salary sacrifice $10,000 for a car, your taxable income drops to $80,000. Using the 2026–27 tax rates (nil up to $18,200, 15% to $45,000, 30% to $135,000), your tax saving is roughly $3,000 (plus Medicare levy). Your take-home pay increases by that saving, but your super guarantee (12% of $80,000 = $9,600) is lower than if you had earned $90,000 ($10,800). You need to weigh the immediate cash benefit against lower retirement savings.

Reading a job ad: what to look for

When comparing offers, look beyond the base salary. The ad might say “$85,000 plus salary packaging for travel”. Ask the employer:

• What travel expenses are covered?
• Is the benefit FBT-exempt or subject to FBT?
• Does salary sacrifice affect your super contributions?
• Can you choose the amount to sacrifice?

Use the pay guides to understand award minimums and the states page to see how your location’s average earnings compare. For instance, if you work in Western Australia (index 106.9) and the job is in retail (index 75.9), the base salary may be lower than the state average, but salary sacrifice could narrow the gap.

Example: comparing two offers

Offer A: $95,000 base salary, no salary sacrifice. Offer B: $85,000 base salary plus salary sacrifice travel expenses worth $10,000 (FBT-exempt public transport).

For a resident in the 30% tax bracket:

• Offer A: taxable income $95,000, tax $20,467 (including Medicare), take-home $74,533.
• Offer B: taxable income $85,000 (after sacrifice), tax $17,467, take-home $67,533 plus the $10,000 benefit (already paid by employer). Your effective cash plus benefit is $77,533, which is $3,000 more than Offer A. But your super is based on $85,000 ($10,200) vs $95,000 ($11,400), a difference of $1,200 a year.

So Offer B gives you more cash now but less super later. Your choice depends on your priorities.

How the index helps

The how the index works page explains that the index compares your gross ordinary-time earnings to the national line. For salary sacrifice, your gross salary is reduced, so the index of your base salary will be lower. But your effective total compensation (salary plus benefit value) may be higher. Always consider the whole package.

Tax and super considerations

• Super guarantee: From 1 July 2026, the super guarantee is 12% of your gross salary (including sacrificed amounts? No – the super guarantee is calculated on your ordinary-time earnings, which is the salary before sacrifice. However, if you salary sacrifice, your employer’s super obligation is based on the reduced salary unless the award or agreement says otherwise. Check your employment contract.
• FBT: If the travel benefit is subject to FBT, the employer may pass on the FBT cost to you, reducing the benefit. FBT-exempt benefits (like public transport provided by the employer) are more valuable.
• Tax brackets: The 2026–27 resident tax rates (excluding Medicare) are: nil to $18,200; 15% to $45,000; 30% to $135,000; 37% to $190,000; 45% above. Medicare levy is 2%. Salary sacrifice can push you into a lower bracket, saving more tax.

Industry and state context

Your industry affects typical pay. For example, professional, scientific and technical services have an index of 114.7, while accommodation and food services is 72.5. If you work in a low-index industry, salary sacrifice travel expenses might be a valuable perk to attract talent. Check the industries page for more benchmarks.

State indices also matter. In the ACT (index 109.9), a $90,000 salary is below average, but in Tasmania (88.6) it’s above. Salary sacrifice can help you afford travel in higher-cost areas.

Final thoughts

Salary sacrifice travel expenses can be a smart way to increase your take-home pay, but it’s not free money. You trade off lower super and possible FBT. When reading a job ad, calculate the total value of the package and compare it to the national index. Use the topics page for more on salary packaging and tax.

Remember: the national index is a benchmark, not a personal quote. Your individual circumstances, including salary sacrifice, will affect your actual take-home pay. Always seek professional advice for your specific situation.