What is salary packaging living expenses?

Salary packaging living expenses allows you to use pre-tax income to pay for certain everyday costs, such as rent, mortgage, or utilities, reducing your taxable income. It is commonly offered by not-for-profit employers and can lower the amount of tax you pay on your annual salary.

How is tax calculated on my annual salary?

For the 2026–27 financial year, resident tax rates 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. Medicare levy of 2% generally applies. Use the tax-free threshold and note that HELP, surcharge, and salary packaging are not deducted in this estimate.

Does super guarantee apply to salary packaging?

Yes, super guarantee is 12% of your ordinary earnings, paid on top of your salary. Salary packaging arrangements can affect what counts as ordinary earnings, so your employer may calculate super differently. The maximum contribution base for super is $270,830 per year.

How to Convert Hourly Rate to Annual Salary: Tax, Super, and Salary Packaging Living Expenses

Your annual gross pay is your hourly rate multiplied by 38 hours per week and 52 weeks, before tax and super.

From Hourly Rate to Annual Salary: Understanding Tax, Super, and Salary Packaging Living Expenses

If you’re paid by the hour or considering a salary offer, converting your hourly rate to an annual figure helps you compare jobs and plan your finances. The basic formula is simple: hourly rate × hours per week × 52 weeks. This article explains how that works for a standard 38-hour week, how tax and Medicare affect your take-home pay, and how salary packaging living expenses can reduce your taxable income.

The 38-Hour Week Formula

Most full-time roles in Australia are based on a 38-hour week. To estimate your annual gross pay, multiply your hourly rate by 38 and then by 52. For example, if you earn $30 per hour:

$30 × 38 × 52 = $59,280 per year

This assumes you work the same number of hours every week, with no unpaid overtime, penalty rates, or allowances. If you work different hours, adjust the weekly figure accordingly. You can also calculate your fortnightly pay by doubling the weekly amount: $30 × 38 = $1,140 per week, so $2,280 per fortnight.

Minimum Wage, Award Rates, and Casual Loading

The National Minimum Wage from 1 July 2026 is $26.44 per hour, or $1,004.90 per week for 38 hours. Casual employees receive a 25% loading on top, making the casual minimum $33.05 per hour. Many industries have award rates that are higher than the minimum. If you’re covered by an award, check your specific classification. The minimum wage page has more details.

When using our the timesheet calculator, you enter your base hourly rate. If you’re a casual, tick the box to add 25% loading – do not enter a rate that already includes loading. The calculator will apply it correctly.

Super Guarantee: Paid on Top

Your employer must pay superannuation guarantee contributions of 12% of your ordinary earnings, on top of your salary. For the example above, that’s an extra $7,113.60 per year (12% of $59,280), up to the maximum contribution base of $270,830. Super is not deducted from your pay; it’s an additional cost to your employer. Learn more about super and packaging.

Tax and Medicare on Your Annual Salary

Once you have your annual gross figure, you can estimate tax. For 2026–27, resident tax rates are:

Nil on the first $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

A Medicare levy of 2% generally applies to your taxable income. Using the $59,280 example:

Tax: $0 on first $18,200 + $4,020 on next $26,800 (15% of $26,800) + $4,284 on remaining $14,280 (30% of $14,280) = $8,304
Medicare levy: 2% of $59,280 = $1,185.60
Total deductions: $9,489.60
Estimated take-home pay: $59,280 – $9,489.60 = $49,790.40

This estimate uses the full tax-free threshold and the 2025–26 Medicare reduction thresholds (since 2026–27 thresholds were not confirmed). It does not include HELP repayments, the Medicare levy surcharge, or salary packaging.

Salary Packaging Living Expenses

Salary packaging living expenses is an arrangement where you use pre-tax income to pay for certain everyday costs, such as rent, mortgage interest, utilities, or groceries. This reduces your taxable income, so you pay less tax. It is most common in the not-for-profit sector, where employees can package up to $15,900 per year (as of 2026–27) for living expenses. By lowering your taxable income, you may also reduce your Medicare levy. However, salary packaging can affect your super guarantee base, so check with your employer.

Comparing Your Pay to Averages

The Australian Bureau of Statistics reports Average Weekly Earnings for May 2026: full-time adult ordinary time earnings are $2,083.70 per week, which equates to about $108,352 per year. All employees (including part-time) average $1,579.20 per week, or $82,118 per year. These are averages, not medians for a specific job. Use our average pay page for more context.

Important Disclaimer

Annual pay here is hourly rate × hours per week × 52. It assumes the same rate every week, no unpaid overtime, no penalty rates, no allowances, and no salary sacrifice. Super is estimated at 12% of ordinary earnings only, paid on top, and stops at the $270,830 maximum contribution base. Tax is the 2026–27 resident scale with the full tax-free threshold. Medicare uses the 2025–26 single reduction thresholds because the 2026–27 reduction thresholds were not confirmed here. HELP, the Medicare levy surcharge, and salary packaging are not deducted. This is an estimate, not a determination of your pay or tax.

Next Steps

Use our the timesheet calculator to convert your hourly rate to annual, fortnightly, and weekly figures. For award-specific rates, see our pay guides. If you’re considering salary packaging, talk to your employer or a tax professional about how salary packaging living expenses could benefit you.