Payroll tax is a state-levied tax on wages paid by employers. Once your total Australian wages exceed the threshold in any state where you have employees, you must register and pay. In 2026, thresholds range from $700,000 to $1.3 million depending on the state — and the rates differ too.
1. 2026 Thresholds and Rates
| State/Territory | Annual Threshold | Rate |
|---|---|---|
| NSW | $1,200,000 | 5.45% |
| VIC | $900,000 | 4.85% (+ surcharges above $10M) |
| QLD | $1,300,000 | 4.75% (4.95% for regional) |
| WA | $1,000,000 | 5.5% |
| SA | $1,500,000 | 4.95% |
| TAS | $1,250,000 | 4.0% (6.1% above $2M) |
| ACT | $2,000,000 | 6.85% |
| NT | $1,500,000 | 5.50% |
Note: Rates and thresholds are indicative for 2026. Always verify with your state revenue office as changes can occur mid-year.
2. What Counts as "Wages"?
Payroll tax is calculated on more than just salaries. Taxable wages include:
- Gross salaries and wages (including commissions, bonuses, and overtime).
- Superannuation contributions (employer contributions, including salary sacrifice).
- Fringe benefits (the grossed-up taxable value of FBT benefits).
- Contractor payments in certain circumstances (especially labour-hire and deemed employee arrangements).
- Directors' fees and termination payments.
3. Grouping Rules
If you own multiple businesses, their wages may be grouped together. Common grouping triggers:
- Common ownership or control of two or more entities.
- Shared employees between related companies.
- Using an employee-leasing arrangement through a related entity.
Grouping means you only get one threshold across all grouped entities. This catches business owners who try to split payroll across multiple companies to stay under the threshold.
4. Interstate Wages
If you have employees in multiple states, you must register and pay payroll tax in each state where work is performed. However, you apportion the threshold across states based on the proportion of wages in each jurisdiction.
5. Exemptions and Concessions
- Small business exemptions — if your total wages are under the threshold, no tax is payable (but you may still need to register).
- Apprentice and trainee wages — some states offer rebates or exemptions for wages paid to apprentices.
- Regional employer incentives — VIC and QLD offer reduced rates for regional employers.
- Parental leave wages — generally exempt from payroll tax calculations.
Key Takeaways
- Payroll tax thresholds range from $900k (VIC) to $2M (ACT) — know your state.
- Taxable wages include super, FBT, contractor payments, and directors' fees.
- Related businesses are grouped — you get one threshold across all entities.
- Multi-state employers must register and pay in each state where staff work.
- Check for apprentice and regional concessions that could reduce your liability.