How the super salary cap affects your take-home pay

Understanding the salary cap and your take-home pay

When you see a job advertisement or a pay slip, the numbers can be confusing. Is the figure your gross salary, your total package including super, or the amount that lands in your bank account? This guide clears up the mix-ups, focusing on the salary cap that applies to superannuation and how tax and the Medicare levy reduce your take-home pay.

Gross salary vs total package vs take-home

Your gross salary is the cash amount you earn before any deductions. Your total package often includes your gross salary plus the employer’s superannuation contribution (12% from 1 July 2026, up to the super salary cap of $270,830). Your take-home pay is what remains after income tax, the Medicare levy, and any other deductions such as HELP/HECS or salary sacrifice.

For example, if a job advert says “$100,000 package”, that might include $89,286 cash salary plus $10,714 super (12% of $89,286). Your actual take-home will be lower after tax and Medicare.

Tax rates for 2026–27

The Australian Taxation Office shows the following resident tax rates for 2026–27 (excluding the Medicare levy):

• $0 – $18,200: Nil
• $18,201 – $45,000: 15c for each $1 over $18,200
• $45,001 – $135,000: $4,020 plus 30c for each $1 over $45,000
• $135,001 – $190,000: $31,020 plus 37c for each $1 over $135,000
• $190,001 and over: $51,370 plus 45c for each $1 over $190,000

These rates do not include the Medicare levy of 2%. You can use our Tax and Medicare guide to estimate your tax bill.

Medicare levy and thresholds

Most people pay a Medicare levy of 2% of their taxable income. However, if your income is below $28,011 (single), you pay no levy. Between $28,011 and $35,013, the levy is phased in at 10 cents per dollar over the lower threshold. Above $35,013, you pay the full 2%. These are the latest published single-person thresholds from the ATO.

The super salary cap explained

The super guarantee requires your employer to contribute 12% of your ordinary time earnings into your super fund, but only up to a maximum earnings base. For 2026–27, that salary cap is $270,830 per year. If your salary exceeds that amount, your employer only pays super on the first $270,830. This cap is important for high earners because it limits the super contributions they receive, but it does not directly affect your take-home pay.

Benchmarks: minimum wage and average earnings

Fair Work sets the national minimum wage at $26.44 per hour and $1,004.90 per week (38 hours). The ABS reports that all employees (including part-time) earn an average of $1,579.20 per week, while full-time adult ordinary time earnings average $2,083.70 per week. These figures are before tax and super. See our Benchmarks page for more details.

How to estimate your take-home pay

To work out your take-home pay, start with your gross annual salary. Subtract the tax using the 2026–27 rates, then subtract the Medicare levy (2% of your taxable income, adjusted for the low-income thresholds). The result is your annual after-tax income. Divide by 26 for a fortnightly figure or by 52 for weekly. Remember that super is not deducted from your take-home pay – it is an additional contribution from your employer.

For a personalised estimate, use our Take-home pay calculator. It accounts for the tax brackets, Medicare levy, and the low-income tax offset (LITO) where applicable.

Common misconceptions

• “Package equals take-home” – No, your total package includes super, which you cannot access until retirement. Your take-home is always less.
• “The salary cap limits my pay” – The super salary cap only limits employer super contributions, not your cash salary. You can earn above $270,830, but super is capped.
• “Medicare levy is a flat 2% for everyone” – It is 2% for most, but low-income earners may pay less or nothing due to the phased thresholds.

Understanding these distinctions helps you compare job offers accurately and plan your budget. For more details, explore our Super guide and Tax and Medicare resources.