How salary sacrifice to superannuation works across states and industries

How salary sacrifice to superannuation works across states and industries

Salary sacrifice to superannuation is a way to boost your retirement savings by asking your employer to put some of your pre-tax salary directly into your super fund. This reduces your taxable income, so you pay less income tax now, while the contribution is taxed at just 15% inside super (up to the concessional cap). The strategy is most valuable when your marginal tax rate is higher than 15%—the more you earn, the more you save. But how much you benefit depends on where you live and what industry you work in, because average earnings vary widely across states and sectors.

The Salary Index as a starting point

The Salary Index measures full-time adult ordinary-time earnings against a national line of 100, which in May 2026 was $108,352 per year (based on ABS Average Weekly Earnings). If your industry or state has an index above 100, typical gross pay is higher than the national average; below 100 means lower. For example, the mining industry has an index of 154.7—about 55% above the national line—while retail trade sits at 75.9, roughly 24% below. Similarly, the ACT (index 109.9) and Western Australia (106.9) are above the line, while Tasmania (88.6) is well below.

These differences matter for salary sacrifice to superannuation because higher gross earnings push workers into higher tax brackets. Someone in mining earning well above the national average is likely in the 37% or 45% bracket, making every dollar sacrificed save 22 to 30 cents in tax (compared to the 15% super tax). In retail or accommodation (index 72.5), typical earnings are lower, so the tax saving is smaller—often only 0 to 15 cents per dollar.

State differences in average earnings

Looking at states, the gap between the highest and lowest is significant. In the ACT, average annualised earnings are about $119,090 (index 109.9), while in Tasmania they are $96,008 (index 88.6). A worker in the ACT earning at the state average is in the 30% tax bracket (up to $135,000), so salary sacrifice to superannuation saves 15 cents per dollar (30% minus 15%). In Tasmania, the state average is below $100,000, so many workers are in the 15% bracket or just into 30%—the saving is smaller or even negative if their marginal rate is 15% (since super tax is also 15%).

Western Australia (index 106.9, $115,825) also offers strong incentives for salary sacrifice, especially in mining-heavy regions. The combination of high state earnings and a high-paying industry like mining (index 154.7) means many workers can sacrifice thousands of dollars each year at a 30% or 37% marginal rate, reducing their tax bill substantially.

Industry differences in tax benefit

Industries with high indices naturally provide more room for salary sacrifice. In professional, scientific and technical services (index 114.7), typical earnings are about $124,300—well into the 30% bracket and often the 37% bracket. A worker on $130,000 could sacrifice $10,000 and save $2,200 in tax (37% minus 15% = 22% saving), while also building super faster.

In education and training (index 105.5, ~$114,300) and health care (97.8, ~$106,000), the benefit is still real but more modest. For a teacher earning $110,000, sacrificing $5,000 saves about $750 in tax (30% minus 15% = 15% saving). In retail or hospitality, where earnings are often below $80,000, the tax saving may be only a few hundred dollars per year, and for those on the national minimum wage ($52,255, index 48.2) the marginal rate is 15%—so salary sacrifice to superannuation offers no immediate tax saving (since both income and super tax are 15%). However, it can still be useful for forced savings and compound growth over time.

Practical considerations

Salary sacrifice to superannuation is not available to everyone. Some modern awards limit or prohibit salary sacrifice arrangements, especially for award-covered employees on minimum rates. Always check your award or enterprise agreement. Also, the concessional contributions cap (set by the ATO each year) applies to the total of your employer’s super guarantee and any salary sacrifice amounts. If you exceed the cap, the excess is taxed at your marginal rate, wiping out the benefit.

The super guarantee itself is 12% from 1 July 2026, up to a maximum contribution base of $270,830. Salary sacrifice is on top of that, but you can also choose to sacrifice part of your before-tax salary to reach the cap. For high earners, especially in mining or professional services, this is a common strategy to reduce tax and build retirement wealth.

How the index helps you compare

The how the index works page explains that the Salary Index is based on gross ordinary-time earnings before any salary sacrifice. So your index value doesn’t change when you sacrifice—it reflects the market rate for your role. But you can use the index to estimate whether your industry or state typically earns enough to make salary sacrifice worthwhile. If your industry index is above 100, you are more likely to benefit. If it’s below 80, the tax saving may be small.

For example, a mining engineer in Western Australia (industry index 154.7, state index 106.9) could sacrifice $27,500 per year (the concessional cap for 2026–27, assuming it remains similar) and save over $6,000 in tax. A retail worker in Tasmania (industry index 75.9, state index 88.6) earning $60,000 would save only about $900 on a $5,000 sacrifice (30% minus 15% = 15% saving). The difference is driven entirely by earnings levels.

Final thoughts

Salary sacrifice to superannuation is a powerful tool for higher-income Australians, especially those in high-paying industries like mining, professional services, and finance, and in states like the ACT and WA. For lower-income workers in retail, hospitality, or Tasmania, the immediate tax benefit is limited, but long-term compounding still makes it worth considering if you can afford the reduction in take-home pay. Always check your award, your super cap, and seek professional advice tailored to your situation.

For more on how pay compares across sectors, see our pay guides and topics pages.