How payroll tax works in Australia
Payroll tax is a state tax on employers. You pay it on the total Australian wages your business pays once those wages pass an annual tax-free threshold. It is not deducted from your workers, and it is separate from PAYG withholding, which is the income tax you hold back from each pay and send to the ATO. Because payroll tax is run by each state and territory revenue office rather than the federal government, there is no single national rate. The wages that count include gross salaries, superannuation, allowances, bonuses, commissions, directors' fees and most taxable fringe benefits.
Payroll tax thresholds and rates by state, 2026
Thresholds and rates differ sharply, so the state you employ in changes the bill. The table below shows the headline annual threshold and rate for each. Several states also taper the threshold or deduction as wages climb, so larger payrolls lose part of the tax-free amount, and a few add levies on very large payrolls. This calculator applies the taper for your state automatically.
| State / territory | Annual threshold | Rate |
|---|
| NSW | $1,200,000 | 5.45% |
| VIC | $1,000,000 | 4.85% (regional 1.2125%) |
| QLD | $1,300,000 | 4.75% / 4.95% |
| WA | $1,000,000 | 5.5% |
| SA | $1,500,000 | 4.95% |
| TAS | $1,250,000 | 4.0% / 6.1% |
| NT | $2,500,000 | 5.5% |
| ACT | $1,750,000 | 6.75% |
Rates for the 2025-26 and 2026-27 years. Queensland and Tasmania use two rates depending on wage size. Regional discounts, mental health levies and large-payroll surcharges are noted in the calculator but not added to the core figure.
Grouping and interstate wages
Two things catch employers out. First, grouping: businesses that share owners, directors or employees are grouped and must add their wages together under a single threshold, so two small companies can become one payroll-tax-paying group. Second, interstate wages: if you pay staff in more than one state, each state gives you only a share of its threshold, based on the proportion of your wages paid there. This calculator treats your wages as a single state for simplicity, which is the right starting point for a business operating in one state. If you employ across borders or are part of a group, use your state revenue office calculator or your accountant for the apportioned figure.
Frequently asked questions
How is payroll tax calculated in Australia?
Payroll tax is a state tax employers pay on their total Australian taxable wages once those wages pass an annual tax-free threshold. Each state sets its own threshold and rate. You add up your wages (gross salaries, superannuation and taxable fringe benefits) across the whole business or group, subtract the threshold or deduction, then apply the state rate. For example in NSW the rate is 5.45% on wages above a $1.2 million threshold, so a $2 million payroll attracts $43,600. Enter your state and wages above for the exact figure.
What is the payroll tax threshold?
The threshold is the level of annual Australian wages you can pay before any payroll tax applies. It differs by state: $1.2 million in NSW, $1 million in Victoria and WA, $1.3 million in Queensland, $1.5 million in South Australia, $1.25 million in Tasmania, $2.5 million in the Northern Territory and $1.75 million in the ACT. Pay less than your state threshold and you generally owe no payroll tax, though you may still need to register.
What are the payroll tax rates by state?
For 2025-26 and 2026-27 the headline rates are NSW 5.45%, Victoria 4.85% (1.2125% for regional employers), Queensland 4.75% rising to 4.95% above $6.5 million, WA 5.5%, South Australia 4.95%, Tasmania 4% then 6.1% above $2 million, the Northern Territory 5.5% and the ACT 6.75%. Several states also taper the threshold away as wages rise, and some add levies on very large payrolls.
Who has to pay payroll tax?
Employers, not employees, pay payroll tax. You become liable once your total Australian taxable wages pass your state's annual threshold. Wages counted include gross salaries and wages, superannuation, allowances, bonuses, commissions, directors' fees and taxable fringe benefits. Businesses that are grouped, meaning related through common ownership or shared employees, add their wages together and share a single threshold, so grouping can push a small business over the line.
How much is payroll tax on $2 million in wages?
It depends on the state. On $2 million of total Australian wages an employer pays about $43,600 in NSW (5.45% above $1.2 million), $48,500 in Victoria (4.85% above the $1 million deduction), $38,000 in Queensland, about $63,460 in WA, $69,300 in South Australia (4.95% on wages after the $600,000 deduction), $30,000 in Tasmania, nil in the Northern Territory (below the $2.5 million threshold) and $16,875 in the ACT. The differences are large, which is why the state you employ in matters. Use the calculator for your exact numbers.
Is payroll tax the same in every state?
No. Payroll tax is administered by each state and territory revenue office, not the federal government, so thresholds, rates, deductions and levies all differ. The rules have been harmonised in many respects, but the numbers are not. An identical payroll can attract very different tax in Sydney, Melbourne, Brisbane or Perth. This calculator applies the current threshold and rate for the state you select.
Does payroll tax include superannuation?
Yes. Superannuation contributions, including the compulsory super guarantee and any salary-sacrificed super, count as taxable wages for payroll tax in every state. So do most allowances, bonuses, commissions and taxable fringe benefits. A short list of payments is exempt or non-liable, and each revenue office publishes an A to Z list of what counts. When you total your wages for this calculator, include super.
This tool is a guide, not tax or financial advice. Payroll tax thresholds, rates, deductions and levies change and turn on details this calculator does not capture, including grouping and interstate wage apportionment. Confirm the exact figure with your state revenue office or your accountant before you lodge.
