Understanding Payroll Tax Thresholds by State

In 2026, many growing Australian businesses are hitting the dreaded "payroll tax cliff." Payroll tax is a tax paid by employers on the total wages they pay to their employees and some contractors. It’s a self-assessed tax, meaning the responsibility is on you to register and pay once you hit the limit. Here's your 2026 guide to state-by-state thresholds.

The 2026 Payroll Tax Thresholds (Approximate)

While the actual rates can change slightly in state budgets, here are the primary annual thresholds for the major states for the 2026 tax year:

• NSW (New South Wales): $1,200,000 threshold | 5.45% rate.
• VIC (Victoria): $700,000 threshold (graduated to zero for larger employers) | 4.85% rate (non-regional) / 1.21% (regional).
• QLD (Queensland): $1,300,000 threshold | 4.75% to 4.95% rate (plus mental health levy for some).
• WA (Western Australia): $1,000,000 threshold | 5.5% rate.
• SA (South Australia): $1,500,000 threshold | 0% to 4.95% rate.

What Is Included in "Wages"?

This is the biggest trap for Aussie business owners. It’s not just the salary you pay! To calculate if you're over the threshold, you must include:

1. Gross Wages & Salaries:** (Full-time, part-time, casual).
2. Superannuation:** Employer contributions (12% in 2026).
3. Allowances & Bonuses:** (Sales commissions, car allowances).
4. Contractor Labor:** If they're deemed employees for payroll tax purposes.
5. Fringe Benefits Tax (FBT) Values:** (Company cars, school fees).

⚠️ Note: If you represent a "group" of companies (e.g., you have multiple separate entities), the ATO and State Revenue Offices often **group your wages together** for threshold purposes. You cannot avoid payroll tax simply by splitting your staff across two ABNs.

Summary: Better Data, Earlier Compliance

Hitting the payroll tax threshold is a sign of business success, but it also increases your cost of employment by ~5%. At PrepMyBook, we proactively monitor our clients' cumulative wages across all states to ensure they register at the correct time, preventing back-dated fines and interest. Let's make 2026 your most compliant growth year yet.

Audit Your Payroll Tax Risk

Our payroll specialists can review your cumulative wages across every Australian state and ensure you're not approaching a threshold hidden in your records. Let's protect your profit margins.

Talk to a Payroll Specialist