Home / Guides / Tax, super and packaging
What a salary packaging vehicle means for your pay on the Australian salary index
Learn how a salary packaging vehicle affects your gross earnings and where your pay sits on the Australian salary index, with examples from common industries.
A salary packaging vehicle does not change your gross ordinary-time earnings, so your salary index remains based on your pre-packaging pay; the national line is 100 ($108,352 annualised).
What is a salary packaging vehicle?
A salary packaging vehicle is an arrangement where you agree to sacrifice part of your pre-tax salary in exchange for certain benefits, such as a car (novated lease), superannuation contributions, or other work-related expenses. This reduces your taxable income, which can increase your take-home pay. In Australia, salary packaging is common in the not-for-profit, health care, and education sectors, but it is available in many industries.
How does a salary packaging vehicle affect your position on the salary index?
The Australian salary index, as used by Salary Index and explained on how the index works, is based on your gross ordinary-time earnings before any salary packaging. The national line is set at 100, which corresponds to full-time adult ordinary-time earnings of $2,083.70 per week or $108,352 per year (ABS Average Weekly Earnings, May 2026). Your salary packaging vehicle does not change this gross figure. For example, if you earn $108,352 per year gross, your index is 100 regardless of whether you salary package a car or other benefits. The index is a benchmark for comparing gross pay across roles and industries, not a measure of net income.
Where does your pay sit if you use a salary packaging vehicle?
Your gross pay determines your index. If you work in an industry where salary packaging is common, you can look at the industry index to see how your gross earnings compare to the national average. For instance:
- Health care and social assistance: index 97.8 (gross annualised $106,000 approximately). Many nurses and allied health professionals use salary packaging vehicles. Their gross pay is slightly below the national line, but packaging can improve net pay.
- Education and training: index 105.5 (gross annualised $114,300 approximately). Teachers and university staff often have access to salary packaging. Their gross pay is above the national average.
- Professional, scientific and technical services: index 114.7 (gross annualised $124,300 approximately). This sector includes many roles where salary packaging vehicles like novated leases are offered.
If your role is not covered by these industry benchmarks, the precise index is uncertain. You can use the industries page to find your sector’s index, or check your state’s index on the states page. For example, if you work in New South Wales, the state index is 101.2, meaning the average full-time worker there earns 1.2% above the national line.
Salary packaging and the national minimum wage
The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week, annualised $52,255, giving an index of 48.2. Workers on the minimum wage are unlikely to benefit significantly from salary packaging because they have little taxable income to reduce. However, if you are on an award that pays above the minimum, or if you work in an industry with higher earnings, salary packaging can be a valuable tool. For example, a retail worker on the retail trade index of 75.9 (gross annualised $82,200) might use salary packaging for super contributions, but the benefit is smaller than for someone on the professional services index of 114.7.
Tax and super considerations
When you use a salary packaging vehicle, your taxable income decreases, which can lower the tax you pay. For the 2026–27 financial year, resident tax rates (excluding Medicare) are: nil up to $18,200; 15% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; and 45% above $190,000. The Medicare levy is 2%. If you salary package a car, for example, the lease payments come out of your pre-tax salary, reducing the amount taxed at your marginal rate. The super guarantee is 12% from 1 July 2026, with a maximum contribution base of $270,830. Salary packaging into super can also be tax-effective, but it does not change your gross earnings index.
Examples of how salary packaging fits with the index
Consider a teacher in Victoria. The state index for Victoria is 98 (gross annualised $106,137), and the education and training industry index is 105.5. If the teacher’s gross pay is $110,000, their index is approximately 101.5 (110,000 / 108,352 × 100). They decide to salary package a car through a novated lease, sacrificing $15,000 per year. Their gross pay remains $110,000, so their index stays at 101.5. However, their taxable income drops to $95,000, reducing the tax they pay. The salary index does not capture this net benefit; it only reflects the gross figure.
Another example: a nurse in Queensland. The state index for Queensland is 97.9 (gross annualised $106,064), and the health care index is 97.8. If the nurse earns $100,000 gross, their index is about 92.3. They salary package $10,000 into super. Their gross pay and index remain unchanged, but their take-home pay after tax and super may be higher than someone earning the same gross without packaging.
Common questions about salary packaging vehicles and the index
Does salary packaging affect my award or minimum wage?
No. Salary packaging is a voluntary arrangement between you and your employer. It does not change your award classification or the minimum wage you are entitled to. Your gross ordinary-time earnings must still meet the award rate or national minimum wage. The index is based on those gross earnings.
Can salary packaging push my index down?
No, because the index uses gross earnings before packaging. Your index is fixed by your salary, not by how you spend it. If you reduce your gross salary through packaging, that would be a different arrangement (salary sacrifice reduces gross pay). But typical salary packaging vehicles like novated leases are structured so that the employer pays the benefit from pre-tax salary, and your gross salary remains the same for index purposes. Always check your employment contract.
Where can I learn more about the salary index?
Visit the topics page for more guides on how pay compares to the national line. You can also read about pay guides for specific industries and awards. The salary index is a useful tool for understanding where your gross pay stands relative to the average Australian full-time worker.
Final thoughts
A salary packaging vehicle is a tax-effective way to use your pre-tax income for certain expenses, but it does not change your gross earnings or your salary index. The index remains a reliable benchmark for comparing your base pay to the national line. If you are considering salary packaging, factor in how it affects your net income, but remember that the index is about gross ordinary-time earnings only.
Questions people ask
Does a salary packaging vehicle change my salary index?
No. The salary index is calculated from your gross ordinary-time earnings before any salary packaging. For example, if your gross annual pay is $108,352, your index is 100 regardless of whether you salary package a car or other benefits. Packaging only affects your taxable income and take-home pay, not the gross figure used for the index.
How does a novated lease (a common salary packaging vehicle) relate to the national line?
A novated lease is a type of salary packaging vehicle where you sacrifice part of your pre-tax salary to pay for a car. Your gross earnings remain the same, so your salary index is unchanged. However, the reduced taxable income can mean you keep more of your pay. The national line (index 100) is a benchmark for gross pay, not net pay.
Is salary packaging available for workers earning below the national average?
Salary packaging is often offered by employers in sectors like health care and education, where industry indices are 97.8 and 105.5 respectively. Workers on the national minimum wage (index 48.2) may not benefit as much because packaging reduces taxable income, but low-income earners may have little tax to save. Check your award or employer policy.