How to Compare Job Offers Using Take-Home Pay and Salary Continuance

Comparing Job Offers: Focus on Take-Home Pay

When you receive a job offer, the headline salary is only part of the story. What matters is the amount that reaches your bank account each fortnight after tax and the Medicare levy. This guide helps you compare offers by calculating your net pay and considering benefits like salary continuance.

Step 1: Understand the 2026–27 Tax Rates

The Australian Taxation Office has published the tax rates for residents for the 2026–27 income year. The first $18,200 of your income is tax-free. Then:

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

These rates do not include the Medicare levy of 2%. Most full-time workers pay the full 2%, but if your income is below $28,011 (single) you pay none, and between $28,011 and $35,013 you pay a reduced rate (10c per dollar over the lower threshold). These are the latest published single-person Medicare thresholds.

Step 2: Calculate Your Take-Home Pay

To estimate your net pay, subtract the tax and Medicare levy from your gross annual salary. For example, if you earn $60,000:

• Tax on first $18,200: $0
• Tax on $18,201–$45,000 ($26,800): $4,020
• Tax on $45,001–$60,000 ($15,000): $4,500
• Total tax: $8,520
• Medicare levy (2% of $60,000): $1,200
• Total deductions: $9,720
• Take-home pay: $50,280 per year, or about $1,933 per fortnight

Remember, this is a resident estimate only. It excludes HELP/HECS, the Medicare levy surcharge, salary sacrifice, and payroll tax-table rounding. Use the Take-home pay calculator for a more precise figure.

Step 3: Factor in Salary Continuance

Salary continuance is an insurance benefit that replaces a portion of your income if you cannot work due to illness or injury. It is often offered as part of a total compensation package. While it does not directly increase your take-home pay (employer-paid premiums are generally not taxable income to you), it provides crucial income protection. When comparing job offers, consider:

• The level of cover (e.g., 75% of salary)
• The waiting period before payments start
• The benefit period (e.g., 2 years or to age 65)

A job with a slightly lower gross salary but generous salary continuance may offer better financial security. Always review the policy details.

Step 4: Use Benchmarks to Contextualise

To see how an offer compares to market rates, refer to these benchmarks:

• National minimum wage: $26.44 per hour, $1,004.90 per week (from 1 July 2026, Fair Work Ombudsman)
• All employees average weekly total earnings: $1,579.20 per week (ABS, May 2026, includes part-time)
• Full-time adult ordinary time earnings: $2,083.70 per week (ABS, May 2026, excludes overtime and employer super)

These figures help you gauge whether an offer is competitive. Also note that superannuation is 12% from 1 July 2026, and job ads often state salary plus super. Super is not deducted from your take-home pay in that case.

Step 5: Don’t Forget Other Factors

Beyond salary continuance, consider:

• Salary packaging: You can reduce taxable income by sacrificing salary for benefits like a car or extra super. This affects take-home pay.
• Medicare levy surcharge: If you don’t have appropriate private health insurance and earn above a threshold, you may pay an extra 1%–1.5%.
• Study and training support loans: Repayments are withheld from your pay.

For a full comparison, use the Tax and Medicare guide and the ATO’s tax withheld calculator.

Final Thoughts

When comparing job offers, always calculate the net amount that will land in your bank account. Salary continuance is a valuable benefit that protects your income, but it does not appear in your fortnightly pay. Weigh it alongside the net salary, super, and other perks. This approach ensures you make an informed decision based on what you actually take home.