What is OTE in salary? A guide to your take-home pay after tax and Medicare

What is OTE in salary and why it matters for your take-home pay

When you see a job advertised with a salary figure, it usually refers to your gross annual pay – the amount before tax, Medicare, and other deductions. But to understand what actually lands in your bank account each fortnight, you need to know a few key terms: ordinary time earnings (OTE), superannuation, and the tax rates that apply to Australian residents.

What is OTE in salary?

OTE stands for ordinary time earnings. It is the amount you earn for your ordinary hours of work, including base salary, commissions, allowances, and shift loadings. OTE does not include overtime payments. Your employer uses your OTE to calculate the compulsory super guarantee contribution – currently 12% from 1 July 2026, up to a maximum contribution base of $270,830 per year. This super is paid on top of your salary, not deducted from it, so your take-home pay is unaffected by the super contribution itself. For more on how super fits into your total package, see our Super guide.

How your take-home pay is calculated

Your take-home pay is your gross salary minus:

• Income tax (using the 2026–27 resident tax rates)
• Medicare levy (2% of taxable income, with reduced rates for low-income earners)
• Any other deductions you authorise (e.g., salary sacrifice, union fees)

The Australian Taxation Office publishes the tax rates for residents. For 2026–27, the rates are:

Taxable income	Tax on this income
$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. The Medicare levy is an additional 2% of your taxable income for most taxpayers. However, if your taxable income is below certain thresholds, you may pay a reduced rate or none at all. The latest published single-person Medicare thresholds are $28,011 (lower) and $35,013 (upper). If your income is between these amounts, the levy is 10c per dollar over the lower threshold. Above the upper threshold, you pay the full 2%.

You may also be eligible for the Low Income Tax Offset (LITO). For 2026–27, the maximum offset is $700 for taxable incomes up to $37,500. It then reduces by 5c per dollar until $45,000, and further reduces by 1.5c per dollar until $66,667. LITO can only reduce your tax to zero – it cannot create a refund.

Example: National minimum wage take-home pay

Fair Work sets the national minimum wage at $26.44 per hour or $1,004.90 per week (based on a 38-hour week). That works out to an annual salary of about $52,255. Using the 2026–27 rates:

• Taxable income: $52,255
• Tax: $4,020 + 30c per dollar over $45,000 = $4,020 + 0.30 × ($52,255 – $45,000) = $4,020 + $2,176.50 = $6,196.50
• Medicare levy: 2% of $52,255 = $1,045.10 (full rate, as income exceeds $35,013)
• LITO: $700 reduced by 5c per dollar over $37,500 = $700 – 0.05 × ($52,255 – $37,500) = $700 – $737.75 = $0 (offset fully phased out)
• Total tax and Medicare: $6,196.50 + $1,045.10 = $7,241.60
• Annual take-home: $52,255 – $7,241.60 = $45,013.40
• Fortnightly take-home: $45,013.40 ÷ 26 ≈ $1,731.28

This is an estimate only – your actual take-home may differ due to HELP/HECS repayments, salary sacrifice, or the Medicare levy surcharge. Use our Take-home pay calculator for a personalised result.

How OTE relates to your salary package

When a job advertisement says “$80,000 plus super”, the $80,000 is your OTE (assuming no overtime). Your employer will pay an additional 12% super on that $80,000 – that’s $9,600 into your super fund. Your take-home pay is calculated on the $80,000, not the $89,600. So understanding what is OTE in salary helps you compare job offers accurately. For more on salary packaging options, see Salary packaging.

Benchmark figures for context

To give you a sense of where your salary sits, here are some benchmarks from Fair Work and the ABS:

• National minimum wage: $26.44/hour, $1,004.90/week, annualised $52,255 (source: Fair Work Ombudsman, from 1 July 2026)
• All employees average weekly total earnings: $1,579.20/week, annualised $82,118 (ABS Average Weekly Earnings, May 2026, seasonally adjusted – includes part-time)
• Full-time adult ordinary time earnings: $2,083.70/week, annualised $108,352 (ABS, excludes overtime and employer super)

These figures are before tax. Your after-tax amount will be lower, as shown in the example above. For more benchmarks, see our Benchmarks page.

Important notes

This guide provides an estimate for Australian residents only. It does not account for HELP/HECS repayments, the Medicare levy surcharge (if you earn over certain thresholds and don’t have private hospital cover), salary sacrifice arrangements, or payroll tax-table rounding. Always check your payslip and use the ATO’s tax estimator for a precise calculation. The Australian Taxation Office provides the official tax rates and Medicare thresholds, and Fair Work sets the minimum wage and award conditions.

For a step-by-step method to calculate your own take-home pay, visit our Method page. If you’re unsure about your award coverage, use Fair Work’s Pay and Conditions Tool – it calculates minimum hourly rates, penalties, and allowances under your award.