New South Wales
Annual tax-free threshold: $1,200,000
| Wages above the $1.2 million threshold | 5.45% |
|---|
- Tax is paid on wages above the threshold, which is apportioned for interstate wages and part-year employers.
Reference data
Payroll tax rates and thresholds by state, 2026-27
Every state and territory sets its own payroll tax rate and tax-free threshold. For 2026-27 the annual threshold runs from $1,000,000 in Victoria and Western Australia to $2,500,000 in the Northern Territory, and the headline rate from 4% (Tasmania, for payrolls up to $2 million) to 6.75% (the ACT, for payrolls up to $20 million). The ACT and the Northern Territory both changed their settings on 1 July 2026.
Last verified 27 September 2026 against each revenue office's published rates.
Rates and thresholds at a glance
| State or territory | Headline rate | Annual threshold | Source |
|---|---|---|---|
| New South Wales | 5.45% | $1,200,000 | Revenue NSW |
| Victoria | 4.85% | $1,000,000 | State Revenue Office Victoria |
| Queensland | 4.75% | $1,300,000 | Queensland Revenue Office |
| Western Australia | 5.5% | $1,000,000 | RevenueWA |
| South Australia | 4.95% | $1,500,000 | RevenueSA |
| Tasmania | 4% or 6.1% | $1,250,000 | State Revenue Office Tasmania |
| Australian Capital Territory | 6.75% | $1,750,000 | ACT Revenue Office |
| Northern Territory | 5.5% | $2,500,000 | Territory Revenue Office |
The headline rate is the general rate most small and mid-sized employers pay. Thresholds are apportioned for interstate wages, grouped employers and part-year employers, and several states phase them out as wages grow. See each state below for the full rate bands.
Rate bands by state
Victoria
Maximum annual deduction: $1,000,000
| General rate | 4.85% |
|---|---|
| Regional Victorian employers | 1.2125% |
- The deduction phases out for Australian wages between $3 million and $5 million (50% phase-out rate); no deduction above $5 million.
- Two surcharges (mental health and wellbeing, and the temporary COVID-19 debt surcharge) apply where Australian wages exceed $10 million.
Queensland
Annual threshold: $1,300,000
| Australian taxable wages of $6.5 million or less | 4.75% |
|---|---|
| Australian taxable wages above $6.5 million | 4.95% |
- The deduction reduces by $1 for every $7 of wages above $1.3 million and reaches zero at $10.4 million.
- Regional employers may be entitled to a 1% rate discount until 30 June 2030. A separate mental health levy applies above its own thresholds.
Western Australia
Annual threshold: $1,000,000
| Taxable wages | 5.5% |
|---|
- The threshold diminishes between $1 million and $7.5 million of Australian taxable wages (by $2 for every $13 over $1 million); no threshold at $7.5 million or more.
South Australia
Registration threshold: $1,500,000
| Australian wages up to $1.5 million | Nil |
|---|---|
| Above $1.5 million, up to $1.7 million | Variable, 0% to 4.95% |
| Above $1.7 million | 4.95% |
- The maximum deduction is $600,000 a year. The rate is set by Australia-wide (or group) wages before the deduction is subtracted.
Tasmania
Annual threshold: $1,250,000
| Wages $0 to $1,250,000 | 0% |
|---|---|
| Wages $1,250,001 to $2,000,000 | 4% |
| Wages $2,000,001 and above | 6.1% |
- Two thresholds and rates apply for 2026-27, as published by the State Revenue Office.
Australian Capital Territory
Annual tax-free threshold: $1,750,000
| Australia-wide wages above $1.75 million, up to $20 million | 6.75% |
|---|---|
| Above $20 million, up to $50 million | 6.85% |
| Above $50 million, up to $100 million | 7.35% |
| Above $100 million, up to $150 million | 7.85% |
| Above $150 million | 8.75% |
- From 1 July 2026 the threshold fell from $2 million to $1.75 million a year, and the general rate became tiered by Australia-wide group wages.
Northern Territory
Annual wage threshold: $2,500,000
| Australia-wide wages under $100 million | 5.5% |
|---|---|
| Australia-wide wages of $100 million or more | 6.5% |
- The 6.5% rate for large employers and groups applies from 1 July 2026.
How payroll on-costs count in an R&D Tax Incentive claim
Short answer: payroll tax, superannuation and workers compensation premiums can all form part of R&D salary expenditure, but only for the share of each employee's time spent on registered R&D activities, and only on actual amounts, not internal standard rates.
- What counts. The ATO lists salaries, wages, allowances, bonuses, overtime and penalty rates, annual, sick and long service leave, superannuation contributions, payroll tax and workers compensation premiums as salary expenditure on eligible R&D activities.
- Apportionment. Wages count to the extent they are incurred on R&D. Leave and superannuation count in the proportion of the year the employee was engaged in R&D, so keep timesheets or equivalent records.
- Payroll tax and workers compensation. These count if incurred on R&D activities, taking into account any exemptions, concessions or premium rates that apply to the R&D staff. If you cannot identify them per employee, use a reasonable basis of apportionment.
- Superannuation. Contributions must be deductible under section 290-60 of the ITAA 1997 and identifiable from staff records. The super guarantee is 12% for 2026-27, paid each payday under Payday Super from 1 July 2026.
- Associates. Salary owed to an associate can only be claimed when it is paid, and only up to market value.
Sources: ATO: Expenditure you can claim (R&D tax incentive); ATO: Super guarantee percentage; Payroll Tax Australia. More on eligible costs in what R&D expenditure you can claim.
Frequently asked questions
- What is the payroll tax rate in NSW for 2026-27?
- 5.45% on wages above the $1,200,000 annual tax-free threshold, according to Revenue NSW.
- Which state or territory has the highest payroll tax threshold?
- The Northern Territory, at $2,500,000 a year. Victoria and Western Australia have the lowest, at $1,000,000, and both reduce it further as wages grow.
- Did payroll tax change on 1 July 2026?
- Yes, in two territories. The ACT lowered its threshold from $2 million to $1,750,000 and replaced its flat rate with tiered rates starting at 6.75%. The Northern Territory kept its $2,500,000 threshold and 5.5% rate but added a 6.5% rate for employers with Australia-wide wages of $100 million or more.
- Is payroll tax included in R&D Tax Incentive expenditure?
- Yes, to the extent it is incurred on R&D activities. The ATO treats payroll tax and workers compensation premiums as salary expenditure alongside wages, leave and superannuation, taking into account any payroll tax exemptions or concessions. If you cannot identify them per employee, use a reasonable basis of apportionment.
- Is superannuation part of R&D salary expenditure?
- Yes, when the contributions are deductible under section 290-60 of the ITAA 1997 and identifiable from staff records. The claimable share follows the proportion of the employee's year spent on R&D. The super guarantee rate is 12% for 2026-27, and from 1 July 2026 it is paid each payday under Payday Super.
General information only, not tax, legal or financial advice. Payroll tax depends on grouping, interstate wages, exemptions and concessions; check your liability with the relevant revenue office. Figures are quoted as each office publishes them for 2026-27.