'Flow-on effects' of earning more prevent requests for pay rise in Australia, report finds
The financial consequences of earning more is holding many Australian employees back from asking for a pay rise, according to a new report.
New research from Money.com.au found that 20% of Australians are not asking for a pay rise, citing various reasons that make them think a higher income is not worth it.
Among those reasons is moving into a higher tax bracket, with 50% of Australians avoiding a pay rise saying the added tax burden is not worth the extra income.
Another 23% said they are worried about higher HECS-HELP repayments, according to the findings.
Some 17% said they are worried about losing government concessions or rebates, while nine per cent are concerned a higher income would cost them childcare subsidies or family benefits.
"A pay rise should be something to look forward to after continuing to add value in the workplace or in a business. But many Australians are worried the extra income won't translate into much more money in their pocket once a potentially higher marginal tax rate and other financial consequences are taken into account," said Sean Callery, head of insights at Money.com.au.
"Many households are also concerned about the flow-on effects of earning more, like higher HECS-HELP repayments, losing family benefits or becoming ineligible for government concessions. When you add those factors together, some workers start to question whether chasing a higher salary is actually worth it."
Addressing the financial worries
Australia's older workers are more likely to be worried about a tax hit from a pay rise, according to the report.
Nearly three in four Baby Boomers said the income tax implications were their biggest concern when it comes to a pay rise. This is also the worry of 61% of Gen X employees, as well as 42% of Millennials and 26% of Gen Zs.
"It's important to remember, though, that if you move into a higher tax bracket, only the portion of your income above the threshold is taxed at the higher rate," Callery said.
"Your other income below the threshold is still taxed at the lower rates."
Employees' reluctance to ask for a pay increase comes amid reopening salary conversations in 2026. A Robert Half report in February revealed that 99% of businesses are open to engaging in salary negotiations and 97% are willing to offer alternative perks and benefits if expectations are not met.
