The 2025-26 comparison
| State / Territory | Annual tax-free threshold | Payroll tax rate | Regional vs metropolitan | Source (State Revenue Office) |
|---|---|---|---|---|
| New South Wales | $1.2 million | 5.45% | No regional variation | Revenue NSW |
| Victoria | $1.0 million (from 1 July 2025) | 4.85% (metropolitan) | Regional employers 1.2125% | State Revenue Office Victoria |
| Queensland | $1.3 million | 4.75% to $6.5M, 4.95% above, plus mental health levy on large employers | Regional employers get a 1% discount (3.75%) | Queensland Revenue Office |
| Western Australia | $1.0 million (phases out to $7.5M) | 5.5% | No regional variation | RevenueWA |
| South Australia | $1.5 million (phases in to $1.7M) | Up to 4.95% | No regional variation | RevenueSA |
| Tasmania | $1.25 million | 4.0% ($1.25M to $2M), 6.1% above $2M | No regional variation | State Revenue Office Tasmania |
| Australian Capital Territory | $2.0 million | 6.85% | No regional variation | ACT Revenue Office |
| Northern Territory | $1.5 million | 5.5% | No regional variation | Territory Revenue Office |
Figures current for the 2025-26 financial year. Thresholds and rates usually change on 1 July, so confirm the current figure with the relevant State Revenue Office (linked) before relying on it.
Regional versus city
Only Victoria and Queensland currently price payroll tax by location. In Victoria, a business is a regional employer if it pays at least 85% of its wages to employees in regional Victoria, and qualifies for the reduced 1.2125% rate rather than 4.85%. In Queensland, regional employers (an ABN-registered business address in regional Queensland and at least 85% of taxable wages paid to regional employees) receive a 1% rate discount. Every other state and territory applies the same rate statewide, city or country.
A trap as you grow: grouping
Each threshold applies to a business, or to a whole group of related businesses under each state's grouping provisions. Related entities share one threshold between them, not one each. This is the most common way a growing or restructured business is suddenly liable without realising, and it is worth checking with your accountant whenever ownership or structure changes.
Cite or reproduce this table
This resource is free to quote, screenshot or reproduce for editorial and educational use, with a link back to this page. Suggested citation:
True Tally Bookkeeping, “Payroll Tax by State and Territory in Australia (2025-26)”, https://www.truetally.com.au/payroll-tax-by-state-australia
Sources and method
Each figure is taken from the relevant State Revenue Office (linked in the table above) and cross-checked against the harmonised payrolltax.gov.au. Payroll tax is a state and territory tax; the ATO administers PAYG, Single Touch Payroll and superannuation, which are separate. This page is general information, not tax advice, and is maintained by True Tally Bookkeeping, a registered BAS service provider.
Not sure which threshold or rate applies to your business, especially across borders or as a group? True Tally keeps payroll accurate and reconciled for businesses across Australia. Book a free call, or read our Victorian payroll tax guide and payroll tax on contractor GPs.
Frequently Asked Questions
Which Australian state has the lowest payroll tax rate?
On the headline rate, Tasmania starts at 4.0% (for wages between $1.25M and $2M) and Queensland is 4.75% up to $6.5M. For regional employers, Victoria's regional rate of 1.2125% is the lowest in the country. The rate alone does not tell the whole story, because the tax-free threshold and any surcharges differ too.
Which states treat regional and city employers differently?
Only Victoria and Queensland. In Victoria a regional employer (at least 85% of wages paid to employees in regional Victoria) pays 1.2125% instead of 4.85%. In Queensland regional employers receive a 1% rate discount. Every other state and territory applies one rate statewide.
Is payroll tax a federal or a state tax?
Payroll tax is a state and territory tax. It is administered by each State Revenue Office, not the ATO. The ATO administers related obligations such as PAYG withholding, Single Touch Payroll and superannuation, but not payroll tax.
Do these thresholds include grouping?
The thresholds apply to a business or, where businesses are related, to the whole group under each state's grouping provisions. Grouped businesses share one threshold rather than one each, which is a common trap as a business expands or restructures.