Australian Wages Are Rising — Are You Keeping More of Yours?
ABS data confirms wages growing above 3% in 14 of 18 industries. Here's what the 2026 Budget wage outlook means for novated lease holders. Read on.
New ABS data released in May 2026 confirms that annual nominal wages are growing above three per cent in 14 of 18 industries — and Treasury's 2026 Budget forecasts expect that trend to continue. According to the Treasury Ministers release [Source 1], this is the longest consecutive streak of above-three-per-cent annual wages growth in more than 15 years.
That's genuinely good news if you're a PAYG employee. But higher gross wages also mean a higher tax bill — unless you're using structures like a novated lease to redirect some of that income before it gets taxed.
What this means for novated lease customers
A novated lease works by packaging your car costs — repayments, fuel, insurance, servicing — out of your pre-tax salary. The higher your income climbs, the more marginal tax you're potentially paying, and the more a pre-tax arrangement can work in your favour.
The 2026 Budget also includes tax cuts for workers, noted in the same Treasury announcement [Source 1]. Tax cuts lower your marginal rate, which slightly reduces (but doesn't eliminate) the pre-tax benefit of novated leasing — so if you've been sitting on the fence, waiting for rates to drop further before acting is not obviously the right call.
For employees whose wages have just crossed a tax threshold — say, moving from the 19% to the 32.5% bracket, or higher — the timing argument for reviewing a novated lease is straightforward. You're now handing more of each extra dollar to the ATO. A novated lease puts some of that dollar back to work on a car you were going to run anyway.
Common questions
Does wages growth actually make a novated lease more valuable?
Generally yes. The pre-tax saving on a novated lease scales with your marginal tax rate. As your salary rises and you move into a higher bracket, more of your income is taxed at the higher rate — and that's exactly the income a novated lease draws from first.
The Budget includes tax cuts — does that reduce the benefit of novated leasing?
A lower marginal rate does mean a smaller proportional pre-tax saving. But the novated lease benefit doesn't disappear — it just adjusts. Most employees still see meaningful potential savings, especially on EVs where the FBT exemption adds a separate layer of benefit.
I got a pay rise recently. Is now a good time to look at a novated lease?
It's a reasonable trigger to review your options. A pay rise — especially one that nudges you into a higher tax bracket — is exactly the kind of change that makes pre-tax salary packaging worth modelling properly.
Does this apply to all industries, or only some?
The ABS wage data covers 18 industries and shows above-three-per-cent growth in 14 of them. Novated leasing is available to any Australian PAYG employee whose employer agrees to participate — it's not industry-specific.
What's the difference between a novated lease and just buying a car outright?
With a novated lease, your repayments and running costs are bundled and drawn from pre-tax salary, which reduces your taxable income. Buying outright means you pay for the car entirely from post-tax dollars with no equivalent offset.