Payroll Tax Rates Australia 2026

Payroll Tax Rates Australia 2026 is the reference companion to the Payroll Tax Calculator: the thresholds and headline rates each state and territory applies to employers whose Australian wages pass the tax-free threshold, with the arithmetic for turning a wage bill into a liability. Payroll tax is a state tax on employers, not a deduction from employees, and it is entirely separate from PAYG withholding.

The 2026 table the calculator uses

| State / Territory | Annual threshold | Rate on wages above threshold | |---|---|---| | New South Wales | $1,200,000 | 5.45| Victoria |$900,000 | 4.85% | | Queensland | $1,300,000 | 4.75| Western Australia |$1,000,000 | 5.50% | | South Australia | $1,500,000 | 4.95| Tasmania |$1,250,000 | 4.00% | | Australian Capital Territory | $2,000,000 | 6.85| Northern Territory |$1,500,000 | 5.50% |

$\text{Payroll tax}=(\text{Total wages}-\text{Threshold})\times\text{Rate}$

Below the threshold the liability is zero. Only the excess is taxed, so crossing the threshold by a dollar costs cents, not the full rate on the whole wage bill, a cliff that does not exist despite widespread belief that it does.

Worked example

A New South Wales employer pays $2,000,000 in wages. Taxable wages are 2,000,000 - 1,200,000 =$800,000, and the tax is 800,000 x 5.45% = **$43,600 a year**, about$3,633 a month, an effective rate of 2.18% on the total wage bill. The same $2,000,000 paid in the ACT would owe only the excess over$2,000,000, which is nothing, while in Western Australia it would owe $1,000,000 x 5.5$55,000. Location of wages, not of head office, decides which table applies to which dollars.

What counts as wages is wider than wages

The taxable base in every state reaches well beyond salaries: superannuation contributions (including salary-sacrificed amounts), bonuses and commissions, allowances, fringe benefits (at their grossed-up value), termination payments in many cases, and payments to many contractors whose work is labour-only or predominantly for one business. The contractor provisions are the classic trap: a business comfortably under the threshold on salaries alone can be carried over it by deemed wages to contractors, and grouping provisions aggregate related businesses so splitting payroll across entities does not manufacture multiple thresholds. Exemptions exist (apprentices and trainees in several states, maternity and adoption leave wages, genuine independent contractors meeting the tests) but they are specific and documented, not general.

Multi-state employers and the threshold

An employer paying wages in several states does not get a full threshold in each: the threshold is apportioned by the share of Australian wages paid in that state, and registration is required state by state once the relevant tests are met. Returns are generally monthly with an annual reconciliation, and the monthly figures are estimates trued up at year end, which is why the calculator also expresses the annual figure monthly. Part-year employers and businesses that cross the threshold mid-year face pro-rated thresholds, handled in the annual return rather than by this headline arithmetic.

Using the table honestly

These are headline rates as stored in the calculator. Several states layer additional structure on top: Queensland applies a higher rate to very large wage bills, Tasmania runs a two-tier scale, and Victoria has applied surcharges to large employers in recent years. Thresholds also change with state budgets (Victoria's threshold has been rising in steps toward $1,000,000). Treat the table as the planning model it is, confirm the current figures with the relevant State Revenue Office before lodging, and remember that wages for payroll tax are defined by each state's harmonized-but-not-identical legislation.

Frequently Asked Questions

Is payroll tax the same as PAYG withholding?

No. PAYG withholding is employees' income tax collected by the employer for the ATO. Payroll tax is the employer's own state tax on its wage bill, payable only once wages pass the state threshold, and never deducted from an employee's pay.

Do superannuation contributions count toward the threshold?

Yes. Employer super contributions, including salary-sacrifice amounts, are taxable wages for payroll tax in all states, which is why a wage bill that looks under the threshold on salaries alone may not be.

What happens if related businesses are grouped?

Their wages are combined and one threshold is shared across the group, apportioned among members. Grouping is mandatory where the grouping tests are met; it is not an election, and failing to group is a common audit finding.