Question 1

What does take-home pay actually mean, and why is it lower than my salary?

Accepted Answer

Take-home pay - sometimes called net pay - is what lands in your bank account after your employer withholds income tax and the 2% Medicare levy (plus any HELP repayment). For the 2026-27 income year, the first $18,200 of income is tax-free; above that, rates rise from 15% to 45% depending on how much you earn. Your employer also pays 12% of your ordinary-time earnings into super on top of your salary - so a $90,000 salary-inclusive-of-super package is worth less as a cash wage than the same number quoted salary-exclusive-of-super. The tool shows each deduction separately so you can see exactly where your gross pay goes.

Question 2

Do I have to pay the Medicare Levy Surcharge, and when does it kick in?

Accepted Answer

The Medicare Levy Surcharge (MLS) is an extra tax for higher earners who do not hold an eligible private hospital insurance policy. For singles in 2026-27, no surcharge applies if your income is $105,000 or below. Above that threshold, the surcharge applies to your full taxable income at 1% (Tier 1, up to $123,000), 1.25% (Tier 2, up to $164,000), or 1.5% (Tier 3, above $164,000). A $117,000 income with no hospital cover, for example, would attract $1,170 in MLS on top of the standard 2% Medicare levy. The ATO makes the final determination on your MLS liability based on your tax return.

Question 3

How does a HELP or HECS student debt affect my take-home pay?

Accepted Answer

If you have an outstanding HELP or HECS debt, the ATO requires a compulsory repayment each year once your repayment income passes $69,528. Since 2025-26 the system has been marginal. For 2026-27: no repayment up to $69,528; 15% of the amount above $69,528 up to $129,717; 17% on the excess above $129,717 up to $186,050; and 10% of your entire repayment income above $186,050. These amounts are withheld by your employer through the pay-as-you-go system, so they reduce your fortnightly take-home in real time rather than arriving as a lump-sum bill at tax time. The tool estimates this based on the income figure you enter.

Question 4

What is salary sacrifice, and can it increase my take-home pay?

Accepted Answer

Salary sacrifice (also called salary packaging) means asking your employer to redirect part of your pre-tax pay into superannuation instead of paying it to you as cash. Because super contributions are taxed at 15% inside the fund rather than at your marginal income-tax rate, the saving per dollar sacrificed equals your marginal rate minus 15%. For example, if you are in the 30% bracket, each dollar sacrificed saves approximately 15 cents in tax versus taking it as wages. There is an annual limit: all concessional contributions (your employer's 12% Super Guarantee plus any salary sacrifice) cannot exceed $32,500 per year in 2026-27. The tool shows the estimated tax saving and flags whether the amount you enter would exceed the cap.

Question 5

I work for a hospital or charity. Does salary packaging work differently for me?

Accepted Answer

Employees of certain not-for-profit organisations - specifically public benevolent institutions (PBIs) such as registered charities, and public or not-for-profit hospitals and ambulance services - may be able to package living expenses as fringe benefits without incurring Fringe Benefits Tax, up to an annual cap. For PBI employees the cap works out to approximately $15,900 of pre-tax salary per year; for hospital and ambulance employees it is approximately $9,010. These caps are derived from the ATO's grossed-up FBT-exempt limits for the FBT year ending March 2026. If your employer type falls outside these categories - a standard private-sector employer for example - FBT-exempt packaging is not available. Always confirm with your payroll or HR team whether your organisation qualifies before relying on this figure.

Question 6

Why does the calculator show a different result when I tick the 'salary includes super' box?

Accepted Answer

When your employment contract quotes a salary that includes superannuation - often called a 'total package' or 'cost to employer' figure - your actual cash wage is lower because 12% of it is earmarked for your super fund. The calculator divides your package amount by 1.12 to isolate the salary component, then applies tax and the Medicare levy to that lower number. If your contract quotes salary excluding super, the 12% is paid on top of your wage and does not reduce your cash take-home. Getting this distinction wrong is one of the most common reasons people feel underpaid relative to a job offer; comparing two packages on the same basis (both inclusive or both exclusive) gives a more accurate picture of what you will actually receive.

Question 7

Can I use this calculator to plan how much I can borrow for a home loan?

Accepted Answer

The pay calculator gives you an estimate of your annual and monthly take-home pay, which is a useful starting point for budgeting your mortgage repayments. Lenders assess your borrowing capacity on your gross income (before tax) and use their own serviceability model, including a mandatory 3% assessment buffer above the loan rate, to set a maximum loan size. The calculator does not model lender-specific rules or other debts, so the net pay figure here is best used alongside the Borrowing Power calculator to understand both sides of the picture - what you take home and what a lender may be willing to offer. A mortgage broker or lender can give you a formal assessment based on your full financial situation.

Item	Annual
Gross income	$90,000
Income tax (incl. LITO)	$17,520
Medicare levy (2%)	$1,800
Net take-home	$70,680

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