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Evaluating a Pay Rise or Job Offer in After-Tax Terms

A $10,000 salary increase sounds significant — but what lands in your bank account depends on your marginal tax rate, HECS obligations, and whether super is included in the new package or on top. An employee earning $85,000 who receives a $10,000 pay rise faces a marginal tax rate of 32.5% (plus 2% Medicare levy), retaining approximately $6,450 after tax. If they also have a HECS debt, an additional $620 or so is directed to HECS repayments, reducing the net benefit to approximately $5,830/year — or about $224/fortnight. The gross figure means very little; the net figure is what changes your life.

Base salary vs total package — why it matters

A "total package" offer includes superannuation within the quoted figure. A "base salary plus super" offer provides super on top. At 11.5% SG, a $100,000 total package is actually $89,686 base salary plus $10,314 super. A $100,000 base salary plus super is $111,500 total. When comparing offers, always clarify whether super is included or additional — the difference can be up to $10,000–$13,000 per year at these income levels. Similarly, whether bonuses are discretionary or contractual, and whether a car allowance is taxable, affects the real value of a package.

Tax bracket transitions — the myth and the reality

A common misconception is that a pay rise can push you into a higher tax bracket and leave you worse off. This is impossible under Australia's progressive marginal tax system — the higher rate only applies to income within the new bracket, not your entire income. If your income crosses from $134,999 to $135,001, only the $2 above the bracket threshold is taxed at 37% rather than 32.5%. Your net pay always increases with a gross pay increase. The concern is real but misframed: a pay rise can increase your HECS repayments or reduce income-tested benefits — both are worth modelling.