Payroll tax by state 2026: thresholds and rates compared

Why payroll tax is different in every state

Payroll tax is levied by each state and territory government, rather than the Commonwealth government. This means that the rules governing payroll tax – including the tax-free threshold, the applicable rate, and how wages are grouped for calculation – are determined independently by each jurisdiction. Employers operating across multiple states must therefore be aware of, and comply with, the specific requirements of each state where they have employees. Use our compliance calendar tool to stay on top of these variations.

The variation in payroll tax rules reflects the autonomy of state and territory governments in managing their own revenue. Each jurisdiction assesses the needs of its economy and labour market when setting these parameters. Consequently, employers with operations in several states may face different thresholds and rates, requiring careful management of payroll obligations.

Employers should always confirm the current threshold and rate directly with the relevant state revenue office before relying on any information. This ensures compliance with the most up-to-date regulations.

How grouping works

Grouping allows related businesses to be treated as a single entity for payroll tax purposes. This means a single payroll tax threshold applies to the entire group, rather than each individual business within it.

The purpose of grouping rules is to prevent businesses from artificially splitting operations to access multiple payroll tax thresholds. Authorities recognise that this practice would undermine the intended application of payroll tax legislation.

Where a grouped business operates in multiple states, the applicable payroll tax threshold is typically apportioned. This apportionment is generally based on the proportion of wages paid within each state.

Lodgement and payment

Payroll tax obligations generally require employers to submit monthly returns and an annual reconciliation. Most states operate under this system, ensuring regular reporting of wages paid. Employers should utilise the compliance calendar tool to track these recurring obligations.

Monthly returns are typically due by the seventh day of the month following the reporting period. The annual reconciliation is usually due on 21 July. Failure to meet these deadlines will result in penalties and interest charges.

• Ensure timely lodgement and payment to avoid penalties.

Penalties and interest are applied to both late lodgement of returns and any underpayment of payroll tax.

Where to verify your state's settings

Payroll tax settings, including thresholds and rates, are determined and managed by each state and territory government. These settings are subject to change, and employers must refer to the relevant revenue office for the most up-to-date information. Each revenue office publishes details of current thresholds, applicable rates, and any regional or temporary concessions that may be in place.

To verify your state’s specific payroll tax settings, consult the following revenue offices: Revenue NSW, State Revenue Office Victoria, Queensland Revenue Office, RevenueWA, RevenueSA, State Revenue Office Tasmania, ACT Revenue Office, and Territory Revenue Office. These offices are the authoritative source for this information.

For a convenient overview and direct links to each revenue office, see the Rules Mate state hubs.