Take Home Pay in Australia: What You Actually Earn After Tax

What is take home pay?

Take home pay is the money you actually get to keep after your employer withholds income tax and the Medicare levy. It is your net pay, not your gross salary. In Australia, your employer deducts tax according to the tax tables provided by the Australian Taxation Office (ATO) and sends it directly to the ATO. The Medicare levy is an additional 2% of your taxable income (with some exceptions). Your take home pay is what lands in your bank account each pay period.

Understanding your take home pay is essential for budgeting, because it is the real amount you have to spend or save. The Salary Index measures gross ordinary-time earnings, so it gives you a benchmark for your gross pay. To know what you actually earn after tax, you need to calculate your net income.

How the salary index relates to take home pay

The salary index is a simple way to see where your gross annual pay sits against the national line of 100. The national line is based on full-time adult ordinary-time earnings of $108,352 per year (from the ABS Average Weekly Earnings, May 2026). If your gross pay is exactly that, your index is 100. If you earn less, your index is lower; if you earn more, it is higher.

But your take home pay is always less than your gross pay because of tax and Medicare. For example, someone earning the national average (index 100) would have a gross of $108,352. Using the 2026–27 resident tax rates (nil to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000, 45% above) plus the 2% Medicare levy, their take home pay would be approximately $83,159 per year. That is about 77% of their gross. The exact percentage depends on your income level because the tax system is progressive.

How the index works explains the calculation in more detail. The index is a gross benchmark, not a net figure.

Take home pay examples

National minimum wage

The national minimum wage from 1 July 2026 is $26.44 per hour, or $1,004.90 per week, annualised to $52,255. That gives a salary index of 48.2. After tax and Medicare, a resident adult earning this amount would take home roughly $43,600 per year. That is about 83% of gross, because a larger portion of income falls in the lower tax brackets.

Average earnings by state

State indices show how average gross earnings vary across Australia. For example, the ACT has an index of 109.9 (gross $119,090), while Tasmania has an index of 88.6 (gross $96,008). Using the same tax rates, the ACT earner would take home about $89,500, and the Tasmanian earner about $74,800. The difference in take home pay reflects the difference in gross earnings, not a different tax treatment. You can see all state indices on the states page.

Industry differences

Industries also have different average indices. Mining has a high index of 154.7 (gross $167,600), while retail trade is 75.9 (gross $82,200) and accommodation and food services is 72.5 (gross $78,600). A miner on the industry average would take home roughly $120,000 after tax, while a retail worker would take home about $64,000. These are gross benchmarks; your personal take home depends on your exact salary and any allowances. Explore more on the industries page.

Factors that affect your take home pay

Tax brackets and the tax-free threshold

The first $18,200 of your income is tax-free. Then you pay 15% on the next $26,800, 30% on the next $90,000, and so on. If you have a higher gross income, a larger portion is taxed at higher rates, so your take home pay as a percentage of gross decreases. For example, someone on $200,000 gross (index 184.6) would pay about $60,000 in tax plus Medicare, taking home around $140,000 (70% of gross).

Medicare levy

The Medicare levy is a flat 2% on your taxable income. It is added to your income tax. For most people, it is a straightforward deduction. Some people may be exempt or pay a reduced rate, but the standard estimate used here includes the full 2%.

Superannuation

Superannuation is not part of your take home pay. Your employer pays the super guarantee (12% from 1 July 2026) on top of your gross salary into a super fund. That money is not available until retirement. When you see your gross salary, remember that your take home pay does not include super. The salary index also measures gross ordinary-time earnings excluding super.

Awards and enterprise agreements

Your actual pay may be set by a modern award or an enterprise agreement, which can be higher than the national minimum wage. For example, the award floor for many entry-level roles is $25.74 per hour. If you are paid under an award, your gross pay might be higher than the minimum, and your take home pay will be correspondingly higher. Check the pay guides for more on award rates.

Estimating your own take home pay

To estimate your take home pay, start with your gross annual salary. If you know your salary index, multiply it by $108,352 and divide by 100 to get your gross. Then use the ATO tax rates for 2026–27 to calculate tax, add 2% Medicare, and subtract from gross. Remember that this estimate ignores HELP debts, salary sacrifice, and the Medicare levy surcharge. For a more precise calculation, use the ATO’s online tax calculator or speak to a tax professional.

The topics section has more articles on pay and tax in Australia.

Conclusion

Take home pay is the real money you have to live on. The salary index helps you compare your gross pay to national averages, but your net income depends on tax and Medicare. Whether you are on the national minimum wage, the average earnings, or a high industry index, understanding the difference between gross and net is key to managing your finances. Use the salary index as a starting point, then calculate your take home to see what you actually earn.