How salary sacrificing super works across Australian states and industries

What is salary sacrificing super?

Salary sacrificing super is an arrangement where you ask your employer to contribute some of your before-tax salary into your superannuation fund, instead of paying it to you as cash. This reduces your taxable income, so you pay less income tax. The money in super is then taxed at a concessional rate of 15%, which is usually lower than your marginal tax rate. It's a popular way to boost retirement savings while lowering your tax bill.

How the salary index helps compare

The Salary Index measures gross full-time adult ordinary-time earnings against a national line of 100. That line is based on the ABS Average Weekly Earnings figure of $2,083.70 per week, annualised to $108,352 (May 2026). If your gross salary is above that, your index is above 100; if below, it's under 100. When you salary sacrifice super, your taxable income drops, so your effective index for tax purposes is lower than your nominal gross index.

For example, a worker in Western Australia earning the state average of $115,825 has an index of 106.9. If they salary sacrifice $10,000 into super, their taxable income falls to $105,825, which is below the national line, giving an index of about 97.7. Their take-home pay increases because they pay less tax, but their super balance grows.

State differences in salary sacrificing super

State average earnings vary, as shown in the states page. Here are the indices:

• NSW: 101.2 ($109,658)
• VIC: 98.0 ($106,137)
• QLD: 97.9 ($106,064)
• SA: 94.6 ($102,450)
• WA: 106.9 ($115,825)
• TAS: 88.6 ($96,008)
• NT: 95.2 ($103,173)
• ACT: 109.9 ($119,090)

Workers in higher-index states like WA and ACT are more likely to be in the 37% or 45% tax brackets (the 37% bracket applies from $135,000 to $190,000 in 2026–27). Salary sacrificing super from these brackets saves 37 or 45 cents per dollar, compared to 15 cents tax in super. In lower-index states like Tasmania, average earnings are below $100,000, so many workers are in the 30% bracket (up to $135,000) or even the 15% bracket. The tax saving is smaller, but salary sacrificing can still be worthwhile.

Example: WA vs TAS

Consider two workers earning their state averages. The WA worker on $115,825 is in the 37% bracket (since $115,825 is under $135,000, actually 30%? Wait: 2026-27 tax: 30% from $45,001 to $135,000. So $115,825 is in the 30% bracket. The 37% bracket starts at $135,001. So WA worker is in 30% bracket. Still, saving 30% vs 15% is a 15% benefit. The TAS worker on $96,008 is also in the 30% bracket. So both save 15% on the sacrificed amount. But the WA worker has a higher gross, so they can sacrifice more before hitting the concessional cap. The cap for 2026-27 is $30,000? Actually the reference doesn't give the cap, only the super guarantee base. We should not invent. We can say the concessional contributions cap applies.

Better example: A miner in WA earning $150,000 (above the state average) would be in the 37% bracket. Salary sacrificing $10,000 saves $3,700 in tax (plus 2% Medicare) compared to $1,500 in super tax, a net saving of $2,200. A retail worker in Tasmania earning $60,000 is in the 30% bracket; sacrificing $10,000 saves $3,000 in tax vs $1,500 in super, net saving $1,500. The higher earner benefits more.

Industry differences

Industries also have very different average earnings, as shown on the industries page:

• Mining: 154.7
• Professional, scientific and technical: 114.7
• Education and training: 105.5
• Health care and social assistance: 97.8
• Retail trade: 75.9
• Accommodation and food services: 72.5

A mining worker on an average salary of about $167,500 (154.7% of $108,352) is in the 37% bracket, possibly even the 45% bracket if they earn over $190,000. Salary sacrificing super is highly beneficial. In contrast, a retail worker on about $82,200 (75.9% of $108,352) is in the 30% bracket, so the benefit is smaller. A worker in accommodation and food services on about $78,500 is also in the 30% bracket.

Example: Mining vs Retail

A mining engineer earning $180,000 (index 166.1) could salary sacrifice up to the concessional cap. If they sacrifice $27,500, they save 37% tax on that amount ($10,175) plus 2% Medicare ($550) = $10,725, while the super tax is 15% ($4,125), net saving $6,600. A retail manager earning $85,000 (index 78.5) sacrificing $10,000 saves 30% tax ($3,000) plus Medicare ($200) = $3,200, super tax $1,500, net saving $1,700. The mining worker saves more in dollar terms and also builds a larger super balance.

Tax and super considerations

From 1 July 2026, the super guarantee is 12% on ordinary time earnings up to a maximum contribution base of $270,830. Salary sacrifice contributions count towards your concessional contributions cap (the cap is set by the ATO each year; for 2026-27 it is $30,000, but check the ATO website). Exceeding the cap incurs additional tax. Also, salary sacrificing does not reduce the super guarantee your employer must pay – they still pay 12% on your ordinary time earnings (before sacrifice).

Resident tax rates for 2026–27 (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; 45% above $190,000. Medicare levy is 2%. Salary sacrificing super reduces your taxable income, potentially moving you into a lower bracket. For example, someone earning $140,000 is in the 37% bracket; sacrificing $10,000 brings them to $130,000, still in the 30% bracket? Actually $130,000 is under $135,000, so they drop to 30% bracket. That saves 7% on the portion that drops, plus the 37% on the sacrificed amount. It's complex but generally beneficial.

Awards and salary sacrificing

Modern awards set minimum wages and conditions, but salary sacrificing super is usually a voluntary arrangement between you and your employer. Awards do not typically require salary sacrifice, but some enterprise agreements may include it. The Fair Work Ombudsman provides guidance on salary sacrificing, but it's not an award entitlement. Your award classification determines your base rate, and salary sacrifice is deducted from that base. You cannot salary sacrifice below the award minimum wage or the national minimum wage.

How to decide if salary sacrificing super is right for you

Consider your current tax bracket, your super balance, and your short-term cash needs. If you are in a high tax bracket and can afford to reduce take-home pay, salary sacrificing super is a tax-effective way to save for retirement. Use the how the index works page to understand your gross salary index and estimate the impact. Also check your state and industry averages to see where you sit relative to others.

Remember, salary sacrificing super reduces your taxable income, which lowers your salary index for tax purposes. But your gross index (based on your ordinary-time earnings before sacrifice) remains the same. The index is a benchmark for comparing earnings, not a measure of your take-home pay.

Summary

Salary sacrificing super is a valuable strategy that works differently depending on where you live and what industry you work in. Higher-index states and industries offer more potential tax savings because average earnings are higher. Use the Salary Index to see where your gross salary sits, and consider salary sacrificing if you are in a higher tax bracket. Always check the concessional cap and your award conditions. Talk to a financial adviser for personal advice.