What can you salary sacrifice: Know your pay floor and how it compares

What can you salary sacrifice? Understanding the pay floor and your options

When you ask what can you salary sacrifice, you are asking about a voluntary arrangement where you give up part of your pre-tax salary in exchange for benefits such as extra superannuation, a car, or electronic devices. Before you consider salary sacrifice, you need to know the legal minimum pay that applies to you. This guide explains the pay floor and how salary sacrifice fits in.

The legal minimum wage

From 1 July 2026, the national minimum wage is $26.44 per hour for an adult employee not covered by an award or agreement. For a 38-hour ordinary week, that is $1,004.90. The Fair Work Commission sets this rate, and the Fair Work Ombudsman enforces it. On top of this, your employer must pay the super guarantee of 12% on your ordinary time earnings. Important: juniors, apprentices, trainees, and employees on introductory award rates may receive less. For example, a 16-year-old award-free junior gets $12.51 per hour. If you are covered by a modern award or enterprise agreement, that document may require a higher rate than the national minimum.

Salary sacrifice and the minimum wage

Salary sacrifice does not change the minimum wage that applies to you. Your base rate of pay (the amount before any sacrifice) must be at least the national minimum wage or the applicable award rate. After you sacrifice, your take-home cash pay will be lower, but the employer still pays super on your full ordinary time earnings, including the sacrificed amount. So salary sacrifice is a way to structure your pay, not a way to pay less than the legal floor. The Fair Work Act protects your minimum entitlements.

Comparing with averages

The ABS May 2026 survey reports full-time adult ordinary-time earnings of $2,083.70 per week and all employees average total earnings of $1,579.20 per week. These are averages, not minimums. Salary sacrifice is more common among higher earners, but anyone can do it if their employer offers a salary sacrifice arrangement. The average figures give context, but your personal minimum is set by the national minimum wage or your award.

Award and agreement rates

If you work under a modern award, the minimum rate for your classification applies. From 1 July 2026, the lowest ongoing classification cannot be less than $26.44 per hour, and introductory rates (first six months) are $25.74 per hour. Salary sacrifice must still respect these minimums. An enterprise agreement can set higher rates but cannot go below the award or national minimum. Always check your award or agreement before entering a salary sacrifice arrangement.

Tax considerations

Salary sacrifice reduces your taxable income, which can lower the tax you pay. The ATO sets tax rates for 2026-27. Medicare levy of 2% applies once annualised ordinary gross income reaches $30,000. Salary sacrifice can also affect your eligibility for the low income tax offset and other benefits. This site does not provide tax advice; consult a professional.

Internal links

For more on which pay floor applies to you, see Which minimum wage applies. For detailed rate tables, see Rate tables. For guides on how pay works, see Guides.

Summary

When you ask what can you salary sacrifice, remember that the legal floor is the national minimum wage or your award rate. Salary sacrifice is an optional arrangement on top of that floor. Your base pay must meet the minimum, and your super is calculated on your full ordinary time earnings. The precise amount you can sacrifice depends on your employer's policy and your salary level, not on a government-set figure. Always ensure your arrangement complies with the Fair Work Act and your award or agreement.