Pay and records

Payroll tax for employers: thresholds and rates

Payroll tax is a state and territory tax on wages. It applies once an employer’s (or group’s) wages pass a tax-free threshold, which in 2026–27 ranges from $1,000,000 in Victoria and Western Australia to $2,500,000 in the Northern Territory. Rates run from 4% to 6.75% at ordinary payroll sizes. Each state counts super, fringe benefits and many contractor payments as wages.

Updated 5 November 2026. General information, not legal advice.

Who has to pay payroll tax?

Any employer, or group of related employers, whose total Australian wages exceed the tax-free threshold of a state or territory where it pays wages. The threshold is tested against Australia-wide wages, not just wages in one state.

Payroll tax isn’t a federal tax and has nothing to do with PAYG withholding. Each state and territory runs its own scheme through its revenue office, with its own Act, threshold, rate and forms. Most of the definitions are similar across states, but the numbers and some exemptions differ.

If you pay wages in more than one state, you get only part of each state’s threshold. In New South Wales, for example, the threshold is multiplied by your NSW wages as a share of your total Australian wages. A business paying 80% of its wages in NSW gets 80% of the $1,200,000 threshold, which is $960,000.

What are the payroll tax thresholds and rates for 2026–27?

Thresholds range from $1,000,000 (Victoria and Western Australia) to $2,500,000 (Northern Territory), with headline rates of 4% to 6.75%, checked against each revenue office on 5 November 2026.

Payroll tax for a single employer paying all wages in one state, 2026–27
State or territory	Annual threshold	Rate	How it works
New South Wales	$1,200,000	5.45%	Flat rate on wages above the threshold, no taper
Victoria	$1,000,000	4.85%	Deduction reduces by 50 cents per dollar of wages over $3M and is nil above $5M; surcharges of 1% on wages over $10M and a further 1% over $100M
Queensland	$1,300,000	4.75% (4.95% above $6.5M)	Deduction reduces by $1 for every $7 of wages over $1.3M; a separate mental health levy applies above $10M
South Australia	$1,500,000	4.95%	No tax up to $1.5M; above that, tax is on wages over a $600,000 deduction, with the rate phasing in between $1.5M and $1.7M
Western Australia	$1,000,000	5.5%	Threshold reduces by $2 for every $13 of wages over $1M and is nil from $7.5M
Tasmania	$1,250,000	4% then 6.1%	4% on wages from $1,250,001 to $2M; 6.1% on wages above $2M
ACT	$1,750,000	6.75%	Single rate set by total Australian wages: 6.75% up to $20M, rising in steps to 8.75% above $150M
Northern Territory	$2,500,000	5.5% (6.5% at $100M+)	Deduction reduces by $1 for every $2 of wages over $2.5M and is nil from $7.5M

To estimate your bill, use the payroll tax calculator. It applies each state’s taper and tiers for a single employer. It doesn’t model grouping, interstate wages, exemptions or regional discounts.

What counts as wages for payroll tax?

Gross wages plus super contributions, taxable fringe benefits, directors’ fees, bonuses, commissions, many allowances and many payments to contractors.

Payroll tax wages are wider than the amount on a pay slip. Revenue NSW’s taxable wages guide lists items that are commonly included:

salary, wages, bonuses and commissions
superannuation contributions (Revenue NSW says all contributions are liable)
allowances, although some allowances are exempt
all taxable fringe benefits
directors’ fees
shares and options provided to employees
some termination payments
payments to contractors under the contractor provisions (see below).

Do payments to contractors attract payroll tax?

Often, yes. Under the ‘relevant contract’ provisions, payments to contractors for labour are treated as wages unless an exemption applies, even if the contractor has an ABN.

In NSW, a relevant contract is any arrangement under which a contractor provides you with the services of a worker. Only the labour component is taxable. Materials, tools, equipment, vehicles and GST are excluded. If any one of seven exemptions applies to a contractor, all your payments to that contractor are exempt. Three examples:

services provided for 90 days or less in a financial year
services that your business doesn’t ordinarily need
a contractor who provides the same kind of services to the public.

Workers supplied through an employment agency are treated differently: the agency is generally liable. Other states have similar provisions with their own wording and rulings, so check the revenue office where the work is done.

How does grouping work?

Related businesses are grouped and their wages combined, and only one member of the group can claim the tax-free threshold.

Grouping stops businesses splitting a payroll across several entities to claim several thresholds. In NSW, businesses can be grouped as related corporations, through common control, through tracing of interests, or by sharing employees. A revenue office can exclude a business from a group on application in some cases. If you own or control more than one business, check grouping before you assume you are under the threshold.

When do I register and lodge returns?

Register with each state’s revenue office once your wages pass its threshold, then lodge returns on its schedule. In NSW that means monthly returns about 7 days after month end and an annual return by 28 July.

In NSW, you must register when your total monthly Australian wages exceed the monthly threshold. Registered businesses lodge an annual return each financial year and pay either monthly or annually. Revenue NSW’s 2026–27 key dates put most monthly returns around the 7th of the following month. June is covered by the annual return, due 28 July 2027.

Victoria uses an online portal and an annual reconciliation, and other states have their own systems and due dates. Late payment attracts interest and penalty tax, so check the due dates with every revenue office you are registered with.

Are any employers or wages exempt?

Some are. Eligible not-for-profit and religious organisations can apply for exemptions, and some wage types, such as maternity leave pay in NSW, are exempt.

Exemptions and rebates vary by state. Examples include apprentice and trainee rebates in NSW and regional rates or discounts in some states. Treat an exemption as something to confirm with the revenue office, not something to assume.

Questions

What is the payroll tax threshold in NSW for 2026–27?

$1,200,000 a year, with tax at 5.45% on wages above it. The threshold is reduced if you also pay wages in other states.

Is superannuation included in payroll tax wages?

Yes. Super contributions count as wages for payroll tax. Revenue NSW, for example, says all contributions are liable.

Do I pay payroll tax on contractors with an ABN?

Possibly. Having an ABN doesn’t decide it. Under the relevant contract provisions, the labour component of contractor payments is taxable unless one of the contractor exemptions applies.

Which state has the highest payroll tax threshold?

The Northern Territory, at $2,500,000 for 2026–27, although its deduction phases out completely once wages reach $7,500,000.

Sources

Checked against these sources on 5 November 2026. Spotted something out of date? Tell us.