Payroll Tax Requirements in Australia: Rate and Thresholds

Payroll tax Requirements in Australia is a state and territory tax on wages, and the rules are different in every jurisdiction for thresholds, rates, and grouping. Once your total Australian wages go above a state’s threshold, you have to register in that state and pay payroll tax on wages earned there—on top of PAYG withholding and super.

How Payroll Tax Requirements Works in Australia

Payroll tax is separate from income tax and superannuation and is administered by state and territory revenue offices, not the ATO. At a high level, your process looks like this:

• Work out your total taxable wages (salaries, allowances, super, bonuses, many contractor payments).
• Work out where your employees actually work, because payroll tax is based on the state or territory where services are performed.
• Compare total Australian wages against each jurisdiction’s annual threshold.
• If you exceed a threshold, register for payroll tax in that state and apply the correct payroll tax rate on wages in that state.

For a plain‑English overview, iKeep’s “Ultimate Guide to Small Business Taxes in Australia” and TaxApp’s explainer “Payroll Tax and Compliance in Australia – A Complete Guide” both walk through thresholds, grouping, and how payroll tax fits into your broader compliance tasks. The ATO’s page on business structures and key tax obligations also reminds employers that payroll tax is a state‑level obligation, separate from PAYG and super.

If you’re unsure whether your business is caught, articles like TaxByte’s “What Is Payroll Tax? A Simple Explanation for Small Business Owners” and McKinley Plowman’s “Does My Business Need to Pay Payroll Tax?” are good starting points.

Payroll Tax in New South Wales (NSW)

New South Wales has a single threshold and rate, plus proportional‑threshold rules for multi‑state employers.

According to Revenue NSW’s payroll tax thresholds and rates:​

• For the 2025–26 financial year, the annual payroll tax threshold is $1,200,000.
• The payroll tax rate is 5.45%.

That means if your NSW taxable wages (or your grouped wages) exceed $1.2 million in 2025–26, you must register for NSW payroll tax and pay 5.45% on your NSW wages above the threshold.

Revenue NSW gives a simple example:

• If your NSW wages for 2025–26 total $1,500,000, you get the full $1,200,000 threshold, so payroll tax applies to $300,000, and your tax is $300,000 × 5.45% = $16,350.​

If your employees are spread across multiple states, the NSW threshold is scaled based on NSW wages as a share of your total Australian wages.

For example (from Revenue NSW and Scalesuite’s guide):

• Total Australian wages: $3,000,000; NSW wages: $900,000.
• Adjusted NSW threshold = $1,200,000 × (900,000 ÷ 3,000,000) = $360,000.
• NSW payroll tax applies on NSW wages above $360,000.

Scalesuite’s NSW Payroll Tax and Interstate Calculations Guide 2026 breaks this multi‑state formula down step by step. QuickBooks also provides a practical summary in “Payroll Tax New South Wales (NSW): FY25‑26 Rates & Details”.

Payroll Tax in Victoria

Victoria has a threshold that phases out for larger employers, plus different rates depending on wages and location.

The State Revenue Office (SRO) sets out the details on its pages for current payroll tax rates and threshold and phase‑out rate:

Key points for 2025–26:

• From 1 July 2025, the annual tax‑free threshold increases to $1,000,000 (from $900,000), with a monthly threshold of $83,333.​
• From 1 July 2024, a threshold phase‑out applies when your total Australian taxable wages are between $3 million and $5 million.
  • The phase‑out rate is 50% from 1 July 2025, so your effective threshold shrinks as your wages approach $5 million.​
• Employers with more than $5 million in total Australian wages no longer receive any threshold and pay payroll tax on all Victorian wages.​

The current rates page lists the actual percentages, including any mental health or metropolitan levies. Because Victoria has separate rates for some regional employers and large businesses, it’s important to check your exact band on the SRO site rather than assuming a flat, NSW‑style rate.​

Payroll Tax in Western Australia (WA)

Western Australia uses a diminishing threshold model between $1 million and $7.5 million in total Australian wages.

McKinley Plowman’s article “Does My Business Need to Pay Payroll Tax?” summarises WA’s key rules:​

• If your total annual Australian wages are less than $1,000,000, you do not pay WA payroll tax.​
• From 1 July 2023 (and continuing into 2025–26 unless superseded), the WA payroll tax rate is 5.5%.
• If your total Australian taxable wages are between $1 million and $7.5 million, you get a reduced, “diminishing” threshold, so the effective exempt amount shrinks as your wages rise. Payroll tax is effectively (WA taxable wages – deductible amount) × 5.5%.​
• If your total Australian taxable wages are $7.5 million or more, you get no threshold, and payroll tax is simply WA wages × 5.5%.

The WA Government’s “Overview of State Taxes and Royalties 2025–26” confirms that employers with annual Australia‑wide taxable wages of $7.5m+ pay payroll tax on all their taxable wages. Ramco’s Australia Payroll & Tax Compliance guide also lists the WA structure and clarifies that the $1m threshold is the entry point for liability.

Payroll Tax in the Australian Capital Territory (ACT)

The ACT has a flat base rate with surcharges for very large employers, plus a threshold for smaller employers.

According to the ACT Revenue Office’s payroll tax portal and Ramco’s 2026 compliance summary:

From 1 January 2026:

• Employers with annual Australia‑wide wages up to $2 million are below the threshold and don’t pay ACT payroll tax.
• For more than $2 million and up to $50 million in Australia‑wide wages:
  • Base rate: 6.85% (no surcharge).
• For more than $50 million and up to $100 million:
  • 6.85% + 0.50% surcharge.
• For more than $100 million:
  • 6.85% + 1.00% surcharge (effective rate up to 7.85%).

So, mid‑sized ACT employers pay a flat 6.85%, while very large groups pay slightly higher effective rates through the surcharge tiers.

Payroll Tax in Tasmania

Tasmania uses multiple thresholds and rates, with payroll tax charged according to wage bands.

The State Revenue Office sets out the details on its payroll tax rates and thresholds page:​

• There are two main thresholds and two rates for the 2025–26 financial year.
• A lower rate applies to wages between the base threshold and an upper threshold, and a higher rate applies to wages above that upper threshold.​

The exact dollar thresholds and percentages are updated via the Tasmanian budget, so employers with staff in Tasmania should always cross‑check the current values on the SRO site before calculating or lodging payroll tax.​

Other States and Territories (Overview)

For states not detailed above—Queensland, South Australia, and the Northern Territory—the structure is broadly similar:

• Each jurisdiction has its own annual threshold (in recent years often in the $1.3–$1.5 million range).
• Each applies a core payroll‑tax rate around 4–5%, with sometimes reduced rates for regional employers or surcharges for larger wage bills.
• Grouping and multi‑state apportionment rules are conceptually similar: aggregate group wages to test thresholds, then apportion wages to each state.

Because the exact numbers can change with each budget, national summaries like Ramco’s Australia Payroll & Tax Compliance and TaxApp’s payroll compliance guide are useful quick references, but you should always confirm through each state’s revenue‑office website before filing returns.

How to Work Out Your Payroll Tax Obligations Step by Step

For readers who need a practical checklist, you can describe the process like this. TaxApp, iKeep, and McKinley Plowman all propose similar steps.

1. Calculate taxable wages
   • Include salary, wages, bonuses, commissions, director’s fees, many contractor payments, certain allowances, and employer super contributions.
2. Identify where employees work
   • Use the “nexus” rules in each jurisdiction to determine which state’s payroll tax applies—usually the state where the services are performed or, for remote scenarios, where the employee is based.
3. Check thresholds and rates in each state or territory
   • NSW: see Revenue NSW thresholds and rates.​
   • Victoria: SRO Victoria current rates and threshold/phase‑out details.
   • ACT: ACT Revenue Office payroll tax.​
   • Tasmania: SRO Tasmania rates and thresholds.​
   • WA: use McKinley Plowman’s explainer and WA’s state taxes overview for 2025–26.
4. Apply grouping rules
   • If you operate multiple related entities, state laws usually require you to group them and treat their wages collectively for threshold testing.
5. Apportion wages for multi‑state employers
   • Use formulas like the NSW method when you pay wages in more than one state:
     • For example, NSW threshold = $1,200,000 × (NSW wages ÷ total Australian wages).
6. Register and lodge
   • Once you cross a jurisdiction’s threshold, register with that state’s revenue office and lodge returns monthly, quarterly or annually depending on your liability.

Ramco’s Australia Payroll & Tax Compliance page also lists 2025–26 payroll‑tax rates and thresholds by state, which is a helpful table to reference in your blog or link for readers.​