Salary Packaging for Teachers: How It Affects Your Pay on the Australian Salary Index

Understanding Salary Packaging for Teachers

Salary packaging for teachers is a way to use part of your pre-tax salary to pay for certain goods and services, reducing your taxable income and potentially increasing your take-home pay. Common items include laptops, cars, mortgage payments, or school fees. But how does this affect where your pay sits on the Australian salary index? Let’s break it down.

The Salary Index and Where Teachers Sit

The Salary Index measures gross ordinary-time earnings against a national line of 100, which in May 2026 was $108,352 per year (based on $2,083.70 per week). The education and training industry has an index of 105.5, meaning the average gross earnings in that sector are about 5.5% above the national line. However, this is an industry-wide figure that includes all roles from early childhood educators to university lecturers. For school teachers specifically, salaries vary widely by state, experience, and classification.

State indices give another layer of context. For example, the ACT sits at 109.9, while Tasmania is at 88.6. A teacher in Canberra might earn closer to $119,000 on average, while one in Hobart might be around $96,000. These are broad averages, not specific to teachers, but they help you see where your pay might fall relative to the national line.

How Salary Packaging Interacts with the Index

Salary packaging does not change your gross salary – that’s the figure used in the salary index. If you earn $90,000 gross and package $15,000, your gross remains $90,000 (index roughly 83). The packaging only reduces your taxable income to $75,000 for the year. So your index figure stays the same, but your net income improves because you pay less tax.

For example, under 2026–27 tax rates (excluding Medicare), a teacher earning $90,000 would pay about $18,367 in tax. By packaging $15,000, taxable income drops to $75,000, and tax falls to about $13,717 – a saving of $4,650. Add the 2% Medicare levy and the saving is still significant. This is why salary packaging is popular, even though it doesn’t move the index needle.

What Can Teachers Package?

Not all expenses are eligible. Common salary packaging items for teachers include:

• Laptops and tablets (if primarily work-related)
• Car leases (novated leases)
• Mortgage or rent payments (through some not-for-profit employers)
• School fees (if working at a non-government school)
• Superannuation contributions above the compulsory 12% super guarantee

Each arrangement has rules from the ATO. For instance, a novated lease must be used for work and private travel, and fringe benefits tax (FBT) may apply. Teachers in public schools often have fewer packaging options because their employers are government entities with stricter policies. Private and independent schools, many of which are not-for-profit, can offer more flexibility.

Awards, Super, and Tax Considerations

Teacher salaries are usually set by state awards or enterprise agreements. The national minimum wage ($26.44/hr, index 48.2) is a floor, but teachers earn well above that. The Education and Training industry index of 105.5 suggests typical earnings around $114,000, but many teachers start below that and progress with experience.

Super guarantee is 12% from 1 July 2026, and it’s paid on your gross salary, not your packaged amount. So if you package $15,000, your employer still pays super on your full $90,000 gross. That’s a benefit – your retirement savings aren’t reduced by packaging.

Tax-wise, the 2026–27 rates are: nil up to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000, and 45% above. Most teachers fall in the 30% or 37% brackets. Salary packaging shifts some income into lower brackets, saving tax at your marginal rate.

Where to Find More Information

To see how your state compares, check the states page. For a deeper look at how the index is calculated, visit how the index works. And if you want to explore other industries, the industries page has benchmarks for mining, retail, health care, and more.

The Bottom Line

Salary packaging for teachers can boost your net income without changing your gross salary index. The education and training industry sits at 105.5 on the index, but your personal index depends on your actual gross earnings. Packaging doesn’t move that number, but it makes your pay go further. Always check your award or agreement and talk to a salary packaging provider to see what’s available to you.