Understanding the difference between salary and wage for your take-home pay
The national minimum wage is $26.44 per hour or $1,004.90 per week, but most jobs pay more; your take-home pay depends on your annual salary or hourly wage, tax brackets, and Medicare levy.
Introduction
When you receive a job offer, the headline figure is your gross pay — either an annual salary or an hourly wage. But what matters most is the amount that lands in your bank account after tax and the Medicare levy. Understanding the difference between salary and wage helps you compare offers accurately and avoid surprises.
Salary vs wage: what's the difference?
The difference between salary and wage is straightforward. A salary is a fixed annual amount, usually expressed per year, and you are paid the same each pay period regardless of hours worked. A wage is an hourly rate, and your pay varies with the number of hours you work. Both are subject to the same tax rules, but the way you calculate your gross pay differs.
Fair Work Ombudsman sets the national minimum wage at $26.44 per hour or $1,004.90 per week for employees not covered by an award. If you are paid a wage, multiply your hourly rate by your weekly hours to find your weekly pay. For a salary, divide the annual figure by 52 to get weekly pay. Then you can estimate your take-home amount.
How to calculate your take-home pay
Your take-home pay is your gross pay minus income tax and the Medicare levy. Use the 2026–27 tax rates for Australian residents.
Step 1: Determine your gross pay
- If you are on a wage: Multiply your hourly rate by your weekly hours, then by 52 for annual gross. For example, at the minimum wage of $26.44 per hour working 38 hours a week, your annual gross is $52,255.
- If you are on a salary: Use the annual figure directly. Most full-time salaries are quoted as annual amounts, often plus super.
Step 2: Apply tax and Medicare
Income tax is calculated on your taxable income (gross pay minus any deductions). For 2026–27, the resident tax brackets are:
- $0 – $18,200: Nil
- $18,201 – $45,000: 15c per $1 over $18,200
- $45,001 – $135,000: $4,020 plus 30c per $1 over $45,000
- $135,001 – $190,000: $31,020 plus 37c per $1 over $135,000
- Over $190,000: $51,370 plus 45c per $1 over $190,000
The Medicare levy is 2% of your taxable income, but the latest published single-person thresholds are $28,011 and $35,013. If you earn below $28,011, you pay no levy. Between $28,011 and $35,013, the levy is reduced by 10c per $1 over the lower threshold. Above $35,013, the full 2% applies.
Step 3: Add any offsets
You may be eligible for the Low Income Tax Offset (LITO). For 2026–27, LITO provides up to $700 if your taxable income is $37,500 or less, then phases out. This offset can reduce your tax bill to zero but not below.
Using the take-home amount to compare offers
When comparing job offers, always convert both to an annual take-home figure. For a wage, estimate your typical hours per week. For a salary, check whether super is quoted on top (most job ads say "plus super") — super is not deducted from your take-home pay. Use our Take-home pay guide to run the numbers.
Remember that the national minimum wage is a floor; many awards and enterprise agreements set higher rates. The Australian Taxation Office provides tax tables for employers, but you can estimate your own tax using the Tax and Medicare page.
Questions
What is the difference between salary and wage?
A salary is a fixed annual amount paid regardless of hours worked, typically for full-time roles. A wage is an hourly rate paid for actual hours worked, common in casual or part-time jobs. Both are subject to the same tax and Medicare levy rules, but your take-home pay depends on whether you are paid a flat annual sum or by the hour.
How do I calculate my take-home pay from a salary or wage?
Start with your gross pay: for a salary, divide the annual amount by 26 for fortnightly pay; for a wage, multiply your hourly rate by hours worked per fortnight. Then subtract income tax using the 2026–27 resident rates (nil up to $18,200, then 15c per $1 up to $45,000, etc.) and the Medicare levy of 2% of taxable income. If your taxable income is below $37,500, you may qualify for the Low Income Tax Offset (up to $700). The result is your estimated take-home pay.
How does the Medicare levy affect my take-home pay?
The Medicare levy is 2% of your taxable income, but if you earn below $28,011 (single), you pay nothing. Between $28,011 and $35,013, the levy is reduced by 10c per $1 over the lower threshold. Above $35,013, the full 2% applies. This levy is deducted from your pay along with income tax, so it directly reduces the amount that reaches your bank account.