How Salary Packaging WA Affects Your Fortnightly Take-Home Pay
Your take-home pay depends on your income, tax brackets, Medicare levy, and any salary packaging arrangement.
Your Fortnightly Take-Home Pay: The Basics
Your take-home pay is what lands in your bank account after income tax and the Medicare levy are withheld. For most employees, this amount changes every fortnight based on your pay rate, tax brackets, and any salary packaging arrangement. Understanding how these elements interact helps you plan your budget and maximise your net income.
Tax Brackets and the Medicare Levy
For the 2026–27 income year, the tax rates are:
- Nil on the first $18,200
- 15c per $1 from $18,201 to $45,000
- 30c per $1 from $45,001 to $135,000
- 37c per $1 from $135,001 to $190,000
- 45c per $1 over $190,000
You also receive the Low Income Tax Offset (LITO) if your taxable income is below $66,667. LITO reduces your tax by up to $700, phasing out gradually.
The Medicare levy is 2% of your taxable income. If you earn below $28,011, you pay no levy. Between $28,011 and $35,013, the levy is 10c per dollar over the lower threshold. Above $35,013, you pay the full 2%. These thresholds are the latest published single-person figures.
For a full-time worker on the national minimum wage of $26.44 per hour ($1,004.90 per week, $52,255 per year), the fortnightly tax and Medicare levy would be calculated using the above brackets. Your take-home pay is your gross pay minus these deductions.
Salary Packaging WA: How It Works
Salary packaging WA (Western Australia) follows the same rules as the rest of Australia. You and your employer agree to reduce your pre-tax salary in exchange for benefits such as a car, laptop, or super contributions. This lowers your taxable income, so you pay less income tax and Medicare levy. However, your employer may have to pay fringe benefits tax (FBT) on the benefit, which can reduce the overall saving. The Australian Taxation Office provides detailed guidance on salary sacrificing for employees.
For example, if you earn $65,000 and salary package a car worth $17,353, your taxable income drops to $47,647. Your income tax falls from $10,288 to $5,082, and your Medicare levy from $1,300 to $953. After paying car expenses (if any), your net disposable income may increase. The ATO's example shows that with employee contributions, the net benefit can be even larger.
Salary packaging WA is most effective when you have benefits you would otherwise pay with after-tax dollars. Common packaged items include cars, electronic devices, and super. Your employer decides which benefits to offer, and you must arrange the package before you earn the income.
Super Guarantee and Salary Sacrifice
From 1 July 2026, the super guarantee rate is 12% of your ordinary time earnings. Your employer must pay this on your salary before any salary sacrifice. If you salary sacrifice into super, those contributions count towards the concessional cap of $32,500 per year (including your employer's contributions). Salary-sacrificed super is taxed at 15% in your fund, which is often lower than your marginal rate. This can boost your retirement savings while reducing your taxable income.
However, salary packaging into super does not reduce your super guarantee – your employer must still pay the full 12% on your base salary. The sacrificed amount is an additional employer contribution.
Putting It All Together
Your fortnightly take-home pay is the result of your gross pay minus tax, Medicare levy, and any salary sacrifice amount. Salary packaging WA can reduce your tax and levy, but it also reduces the cash you receive directly. The net effect depends on the benefit type, any employee contributions, and your tax bracket. Use the Salary packaging guide to compare scenarios, and check the Tax and Medicare page for current rates. Remember that salary packaging may affect government benefits, child support, and study loan repayments, so consider all impacts before entering an arrangement.
For most employees, the key factors that change your fortnightly pay are your income level, the tax brackets, the Medicare levy thresholds, and any salary packaging arrangement. By understanding these, you can make informed decisions about your pay and benefits.
Questions
What is salary packaging and how does it affect my take-home pay?
Salary packaging (also called salary sacrifice) lets you swap part of your pre-tax salary for benefits like a car or super. This reduces your taxable income, so you pay less income tax and Medicare levy. Your employer may pay fringe benefits tax (FBT) on the benefit, which can reduce the net saving. Your take-home pay will be lower because the sacrificed amount is not paid to you, but you receive the benefit instead. The net effect on your bank account depends on the benefit type and any employee contributions.
How does the Medicare levy apply to salary packaged income?
The Medicare levy is 2% of your taxable income. Salary packaging lowers your taxable income, so the levy also falls. However, if your taxable income is below the single threshold of $28,011, 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%. Salary packaging can push you into a lower bracket, reducing or eliminating the levy.
Can salary packaging reduce my super contributions?
Salary sacrificing into super is a common form of packaging. These contributions are treated as employer contributions and taxed at 15% in your super fund, not at your marginal rate. They count towards the concessional cap of $32,500 per year (including your employer's super guarantee). Your employer must still pay the 12% super guarantee on your ordinary time earnings before the sacrifice. Salary packaging into super can boost your retirement savings while lowering your taxable income.