Australian Wages Are Rising — Here's How Novated Leasing Fits In
ABS data confirms wages grew above 3% for 15 straight quarters. Here's what that means for your novated lease and take-home pay in 2026. Read more.
New ABS data released in May 2026 confirms that annual nominal wages are growing above three per cent in 14 of 18 industries — and have done so for 15 consecutive quarters, the longest such streak in more than a decade and a half. According to the Treasury Ministers release [Source 1], Treasury expects this trend to continue, with the federal Budget upgrading the wages outlook further.
For a PAYG employee, higher wages are obviously welcome. But they also quietly push more of your income into higher tax brackets — which is exactly where a tool like novated leasing starts to do real work.
What this means for novated lease customers
Novated leasing works by redirecting a portion of your pre-tax salary to cover a vehicle's running costs. The higher your gross income, the more tax you're paying on each dollar — and the more a pre-tax arrangement like this can work in your favour. With wages now consistently above three per cent growth and the Budget forecasting further increases, the potential savings from salary packaging a vehicle are as meaningful today as they've ever been.
Layered on top of this, the federal government's FBT exemption for eligible EVs remains in place, meaning employees who choose a qualifying electric vehicle through a novated lease pay zero fringe benefits tax on that vehicle. Combine genuine wages growth with an FBT-free vehicle and you have a legitimate, ATO-sanctioned way to manage your tax position — not a loophole, not hype.
It's also worth being clear about what a novated lease is *not*: it's not a guaranteed windfall, and the numbers depend heavily on your income, the vehicle you choose, and how you structure the lease. If someone is selling you a specific dollar figure before understanding your situation, that's a red flag.
Common questions
Does wages growth actually make novated leasing more valuable?
Generally, yes — because novated leasing reduces your taxable income, the benefit scales with how much tax you're paying. Higher wages without salary packaging means more of your pay is taxed at your marginal rate. Salary packaging redirects some of that pre-tax income toward vehicle costs instead.
Do the recent tax cuts affect how novated leasing works?
Stage 3 tax cuts changed marginal rates for many earners, which slightly altered the tax benefit calculation for some brackets. The core mechanics of novated leasing — pre-tax salary contributions reducing your taxable income — remain unchanged. It's worth modelling your specific situation rather than relying on generic estimates.
Is the EV FBT exemption still available in 2026?
As at the date of this page, the FBT exemption for eligible battery electric and plug-in hybrid vehicles through novated leases remains in place. You should confirm current eligibility rules with your employer or a licensed adviser, as policy can change.
My wages went up — should I review my existing novated lease?
Yes. If your income has increased since you set up your lease, your pre-tax contributions may be structured around an older salary figure. A review can ensure you're making the most of your current earnings and not leaving potential savings on the table.
Is millarX qualified to advise me on this?
millarX holds an Australian Credit Licence (ACL 569484), is a member of the FBAA and AFCA, and is accredited with Pepper. We can walk you through how novated leasing works in your specific situation. We don't provide personal tax advice — for that, you'd speak to your accountant.