Payroll Tax Rates

A threshold is a deduction, not a tax-free allowance

The most common misunderstanding about payroll tax is what crossing the threshold does. It does not work like the income tax free threshold, where the first dollars are untaxed and tax starts above them. In every Australian jurisdiction the threshold operates as a deduction against your wage bill: the tax is calculated on wages above a deductible amount.

What differs is whether that deduction stays fixed or shrinks. In New South Wales it is a straight subtraction, so the tax is the rate applied to wages above the threshold. In Victoria the deduction is tapered away once Australia-wide wages pass a set point, and reaches zero at a higher one. Queensland reduces the deduction by a set amount for every dollar of excess above the threshold. Western Australia tapers its deduction gradually, which is why its transition to the full rate takes longer than most. South Australia applies a maximum deduction that is reduced in bands, with a variable rate over the first band. The Northern Territory uses a diminishing deduction, and Tasmania and the ACT use tiered and banded structures instead.

The practical consequence is that the headline rate tells you very little on its own. Two jurisdictions with an identical rate and different phase-out mechanisms produce different liabilities on identical wages, and a practice only just over a threshold pays far less than the rate implies. The effective rate is almost always lower than the published one.

Most jurisdictions publish more than one rate

Only New South Wales publishes a single flat rate. Every other jurisdiction publishes a structure, and the differences are not cosmetic:

Victoria has a lower rate for regional employers, available where at least 85% of the practice's wages are paid to regional employees, plus two surcharges on top of the metro rate. Queensland has a second, higher rate above a group wage threshold, and a discount for regional employers. Western Australia has a flat rate but a long taper. South Australia uses a sliding scale with a variable rate over its first band. Tasmania has two tiers, with the higher rate applying above a band ceiling. The ACT replaced its flat rate with rates banded by Australia-wide group wages. The Northern Territory has a diminishing deduction and a separate, higher rate for large employers.

A rate reference that shows only a primary rate per jurisdiction under-reports exactly the thing you came to compare, which is why the table above shows the regional and concessionary rate, the surcharges and tiers, and the threshold as separate columns rather than collapsing them into one headline number.

Surcharges sit on top of the rate

Victoria's mental health and wellbeing surcharge and its COVID-19 debt temporary surcharge are calculated on top of the payroll tax otherwise payable, not folded into the metro rate. Queensland's mental health levy works the same way. Both are triggered by Australia-wide wages rather than by the wages of the state concerned, and both are tiered, so they apply only above a substantial national wage base.

This matters when comparing jurisdictions. A jurisdiction whose headline rate looks competitive but which carries a surcharge is not cheaper than one whose headline rate looks higher and carries none. The surcharge column in the table above marks which jurisdictions carry one, and the calculator models them separately from the base rate rather than blending them.

How to read these tables

The first table shows the current financial year in full: the threshold, the standard rate, any regional or concessionary rate, and the surcharges and tiers. Where a jurisdiction does not publish a separate regional rate, the column reads N/A rather than repeating the standard rate, so a blank is never mistaken for a rate. Each jurisdiction's calculator page models its structure in full.

Each rate carries a verification date and a link to the administering revenue office. Where a figure could not be confirmed from published material it is flagged on the page rather than presented as current, and the same discipline applies to the threshold history below: it shows what the registry holds, and the registry's oldest year is the first column.

Why a threshold history is worth publishing

Because a threshold is a moving target and prior-year work is routine. Several of the medical relief provisions operate retrospectively: the ACT's medical amnesty covered periods up to 30 June 2025, and Victoria's relief can reach back to periods before 1 July 2025 for practices the State Revenue Office had not previously advised. Reviewing any of those periods needs the threshold as it stood in the year concerned, not the threshold as it stands today.

It is also the fastest way to see whether a jurisdiction is a moving target at all. Most Australian payroll tax thresholds have been static for years, and the two that moved most recently moved in opposite directions, which is a useful thing to know before assuming a rate you looked up some time ago is still current. The changes list below is computed from the same registry, so it cannot disagree with the table.

The threshold is tested on group wages, not on your entity

A threshold is not per company. Where businesses are grouped for payroll tax, the group is treated as a single employer and only one entity in the group may claim the threshold. That entity is the Designated Group Employer, and every other member of the group is taxable from the first dollar of wages it pays.

Two further mechanics follow from the same place. First, where a practice has wages in more than one jurisdiction, the phase-out and diminishing tests are applied to Australia-wide wages and the resulting deduction is then apportioned to each jurisdiction's share of the wage bill. A practice with wages in two states therefore has each state's threshold reduced by its national total, not by the wages in that state. Second, that apportionment is also what reduces the threshold of a non-DGE group member to zero.

The threshold you read on this page is therefore the threshold before either mechanic is applied. The grouping guide covers how groups form and how the Designated Group Employer is chosen, and the payroll tax calculator applies both.

The limits of these figures

It does not tell you your liability. It publishes the rates and thresholds that the calculators apply to your own figures. It does not cover years the registry does not hold, so the earliest year in the history table is as far back as the figures go, and a question about an earlier period needs the revenue office.

It is general information, not tax advice, and it cannot account for a ruling that applies to your circumstances. Confirm the rate and threshold that apply to you with the administering revenue office or a registered tax agent before you lodge.