Australia's total wage and salary bill grew 6.1 per cent in 2025-26, to about $1.27 trillion, according to the Australian Bureau of Statistics' annual national accounts released on 23 October (ABS table 6, Income from GDP). Over the same year, the income tax households paid rose 9.0 per cent, to about $396 billion (ABS table 36, Household Income Account).
Quick answer: a 6.1 per cent rise in the national wage bill is not a 6.1 per cent pay rise. It counts more people working and more hours as well as higher pay rates. The ABS measure of pay rates alone, the Wage Price Index, rose 3.2 per cent over the year to the June quarter 2026. And because each extra dollar of pay is taxed at your marginal rate, a pay rise adds less to take-home pay, which is the income a car loan lender assesses, than the headline percentage suggests.
This article sets out what the new ABS figures show, why they differ from your own pay rise, and a worked example of how much of a typical pay rise reaches your budget. It is general information, not tax or financial advice.
What the 2025-26 national accounts show for Australian wages
The ABS figures below compare the 2025-26 financial year with 2024-25, in current prices. Percentages for table 36 are our calculations from the published dollar values.
- Wages and salaries: up 6.1 per cent, from $1,193.5 billion to $1,266.1 billion (ABS table 6).
- Employers' social contributions, mainly super: up 8.1 per cent, from $159.6 billion to $172.5 billion (ABS table 6).
- Income tax payable by households: up 9.0 per cent, from $363.2 billion to $395.9 billion (ABS table 36).
- Household gross disposable income: up 5.8 per cent, to $1,827.9 billion (ABS table 36).
- Household consumption spending: up 5.3 per cent, to $1,538.1 billion (ABS table 36).
- Household saving ratio: 6.1 per cent, up from 5.5 per cent in 2024-25 (ABS national accounts 2025-26 key statistics).
The ABS defines compensation of employees as wages and salaries plus employers' social contributions, which are payments that secure employees' entitlements such as retirement benefits (ABS national accounts glossary). The faster rise in employer contributions lines up with the super guarantee rate moving from 11.5 per cent in 2024-25 to 12 per cent from 1 July 2025 (ATO, super guarantee percentage). That money goes to your super fund, not your bank account, so it is not money you can use to make loan repayments. Our article on payday super and your payslip covers how super shows up on a payslip.
Why the wage bill grew faster than your pay rate
The national accounts measure total pay across the whole economy. That total rises when pay rates rise, but also when more people are employed or people work more hours. The Wage Price Index is built differently: the ABS says it measures changes in the price of wages and salaries "unaffected by changes in the quality or quantity of work performed" (ABS WPI methodology).
On that measure, pay rates rose 3.2 per cent over the twelve months to the June quarter 2026 (ABS Wage Price Index). The two numbers are not directly comparable, because one is an index of pay rates and the other a total dollar amount, but the gap shows why the 6.1 per cent figure overstates what a typical worker gained. Our earlier article on wage growth slowing to 3.2 per cent covers the Wage Price Index in more detail, and our guide to the average Australian salary explains which earnings figure lenders tend to look at.
Why income tax grew faster than wages
The ABS tables do not break the 9.0 per cent rise in household income tax down by cause, and household income tax covers tax on all income, not just wages. One feature of the tax system helps explain why tax can grow faster than income: the resident tax rates and thresholds were the same in 2024-25 and 2025-26 (ATO resident tax rates). When thresholds stay fixed, part of each pay rise is taxed at a higher marginal rate than the average rate on the rest of your income. That is our reading of how the system works, not an ABS finding.
For 2026-27, the ATO table shows the rate on income between $18,201 and $45,000 falls from 16 to 15 cents in the dollar, while the 30 per cent rate still applies between $45,001 and $135,000 (ATO resident tax rates). Our article on the 2026-27 income tax cut covers what that change means for borrowing power.
Worked example: how much of a 3.2 per cent pay rise you keep
As an illustration, take a resident employee earning $90,000 a year who receives a 3.2 per cent pay rise, the same as the latest annual Wage Price Index figure. These are our calculations using the ATO's 2026-27 resident rates plus the 2 per cent Medicare levy, and ignore offsets, HELP repayments, deductions and salary packaging:
- Pay rise before tax: $90,000 x 3.2 per cent = $2,880 a year.
- Tax and Medicare levy on the rise: at 30 per cent plus 2 per cent, $921.60.
- Extra take-home pay: $1,958.40 a year, or about $163 a month.
- Average tax rate on the original $90,000: $17,520 tax plus $1,800 Medicare levy is $19,320, or about 21.5 per cent. Each extra dollar is taxed at 32 per cent, which is why tax grows faster than pay.
Now compare that with a car loan. On a $30,000 loan over five years at an assumed 8 per cent a year, with no fees or balloon, the monthly repayment is about $608. That rate is an assumption for the example, not a quoted rate. On those figures, the extra $163 a month covers roughly a quarter of the repayment. Our guide to how car loan repayments are calculated shows the formula, and the car loan calculator lets you try your own numbers.
What it means if you are applying for a car loan
Moneysmart says lenders look at your income, bills and other commitments, and must follow responsible lending obligations, which means they cannot lend if they think you won't be able to make the repayments (Moneysmart, loan rejection). Repayments come out of after-tax pay, so that is the figure to plan around. A few practical points follow from the figures above:
- Use your after-tax pay rise. If your pay went up recently, budget with the change in your net pay on your payslip, not the gross percentage.
- Have the paperwork ready. If your pay rose recently, keep payslips that show the new rate, so the income you state matches your documents. Our guide to how lenders view overtime and bonus income covers pay that varies from week to week.
- Separate super from salary. Higher employer super contributions improve your retirement balance, but they are not income you can use to make repayments.
- Check your spending as well as your income. The national accounts show household spending grew 5.3 per cent in 2025-26. If your costs rose as fast as your take-home pay, your borrowing power may not have changed much. Our guide to car loan borrowing power on an average salary walks through that assessment.
- Compare offers on the comparison rate. Car loan rates differ by lender, credit history, vehicle and term. You can compare current offers on our car loan rates page or start with our car loans overview.
Where these figures come from
All figures were checked against primary sources on 28 October 2026: ABS Australian System of National Accounts 2025-26, released 23 October 2026 (key statistics, table 6, table 36 and the glossary); the ABS Wage Price Index, June quarter 2026, released 19 August 2026, and its methodology; and the ATO's resident tax rates and super guarantee percentages; and Moneysmart's guide to loan rejection. Percentage changes from table 36 and the worked examples are our own calculations.
This article is general information only and does not consider your objectives, financial situation or needs. Consider whether it suits your circumstances and speak to a licensed professional before making a decision.
