Why Your Salary and Your Take-Home Pay Are Not the Same
You negotiate a $90,000 salary. But on your first payday, the amount that hits your account is nowhere near $90,000 ÷ 26 fortnights. Where did the rest go? Understanding the gap between gross salary and net take-home pay is one of the most practically useful things you can know about your finances.
The quickest way to see your exact numbers: Try our Take Home Pay Calculator →
The Five Things Deducted From Your Pay
1. Income Tax (PAYG Withholding)
The largest deduction for most Australians. Your employer uses ATO tax tables to withhold the right amount of income tax each pay cycle based on your expected annual earnings. For a $90,000 salary in 2024–25, your annual income tax is approximately $20,797 before the Low Income Tax Offset.
2. Medicare Levy
The 2% Medicare Levy funds Australia's public health system. On $90,000, that's $1,800 per year — or about $69 per fortnight. It's collected alongside income tax through your employer's PAYG system. Calculate your Medicare Levy →
3. Superannuation
Your employer must contribute 11.5% of your ordinary time earnings into your super fund as of 2024–25 (rising to 12% from 1 July 2025). Super is paid on top of your salary for most employees — it doesn't reduce your take-home pay. However, if your employment contract states your salary is "super inclusive," then your take-home pay will be lower. Always clarify this when accepting a job offer. Check your super guarantee amount →
4. Salary Sacrifice Arrangements
If you've agreed to salary sacrifice — for super, a novated car lease, or other benefits — these pre-tax deductions reduce your taxable income (which lowers your tax bill) but also reduce your gross salary before tax is calculated. The net effect on take-home pay varies.
5. Other Voluntary Deductions
These can include union fees, health insurance premiums (if paid through payroll), or employee share plan contributions. Unlike the above, these don't reduce your taxable income unless specifically structured as salary sacrifice.
A Worked Example: $90,000 Salary, Weekly Pay
- Gross annual salary: $90,000
- Income tax: −$20,797
- Low Income Tax Offset: +$0 (phases out by $66,667)
- Medicare Levy (2%): −$1,800
- Net annual take-home: ~$67,403
- Net weekly take-home: ~$1,296
That means roughly 25% of your gross salary goes to tax and Medicare — so your effective rate is around 25.1% all-in. Your employer then separately contributes $10,350 to your super fund (11.5%).
How to Increase Your Take-Home Pay (Legally)
- Claim all legitimate deductions at tax time to reduce your taxable income and potentially receive a refund
- Salary sacrifice to super — pre-tax contributions are taxed at 15% inside the fund, which is lower than the 32.5% marginal rate if you earn above $45,000
- Review your PAYG variation — if you have significant deductions, you can apply to the ATO to reduce your withholding throughout the year instead of waiting for a refund
- Structured your budget around net pay, not gross salary, from day one
Building a Budget Around Your Real Pay
Once you know your actual take-home pay, you can build a budget that works. A good starting framework is 50% to needs, 30% to wants, and 20% to savings and debt repayment. A physical budget planner can help enormously — browse budget planners on Amazon to find one that suits your style.
You can also use our Budget Planner Calculator → to map out your expenses against your take-home pay and spot where you have room to save.
The Bottom Line
Your gross salary is a starting point, not a spending amount. Once you've accounted for income tax, Medicare Levy, and any voluntary deductions, your real take-home pay is typically 20–30% lower. Knowing this number precisely — not roughly — is the foundation of any solid financial plan.