Payroll tax thresholds NSW 2025–2026
A simple, practical guide for NSW employers (with examples and compliance tips)
Updated 21 Jan 2026 • Thresholds and rates shown are for the 2025–26 financial year (1 July 2025 to 30 June 2026)
Written by
Steve Harris
This guide provides general information about NSW payroll tax and related rules as at 21 Jan 2026. It is not financial, legal, accounting, or tax advice.
Payroll tax rules, thresholds, and administrative guidance can change. Always confirm current rules on Revenue NSW (and get advice for your specific circumstances), especially if you have grouped entities, contractors, or multi-state employees.
No liability: RosterElf Pty Ltd, its directors, employees, and authors expressly disclaim any and all liability for any loss, damage, cost, or expense (whether direct, indirect, consequential, or otherwise) arising from or in connection with reliance on the information in this guide.
Quick summary for time‑poor business owners
If you only read one section, read this:
NSW payroll tax (2025–26):
- Annual tax‑free threshold: $1,200,000
- Payroll tax rate: 5.45%
- Payroll tax is calculated only on wages above the threshold.
- It's based on total Australian wages (not just NSW wages): You generally pay payroll tax in NSW if you pay wages in NSW and your total Australian wages exceed the annual threshold.
Registration trigger uses monthly thresholds:
You must register for payroll tax in NSW if you pay wages in NSW and your total Australian wages exceed the monthly threshold in any month.
Monthly thresholds (2025–26):
- 28‑day month: $92,055
- 30‑day month: $98,630
- 31‑day month: $101,918
When do you pay monthly vs annually?
If your annual payroll tax liability in NSW exceeds $20,000, you must pay monthly (otherwise, you pay via the annual process, with an option to pay monthly).
What is payroll tax in NSW?
Payroll tax is a state tax paid by employers (not employees) on taxable wages. In NSW, it applies once your wages exceed the relevant threshold.
Two practical takeaways:
- It's not "a flat % of your payroll" — you pay 5.45% only on wages above your threshold entitlement.
- The rules can get tricky when you have interstate wages, grouped businesses, contractors, or staff working across states (nexus).
NSW payroll tax threshold and rate 2025–26
For the 2025–26 financial year (1 July 2025 to 30 June 2026) in NSW:
| Item | 2025–26 (NSW) |
|---|---|
| Annual tax‑free threshold | $1,200,000 |
| Payroll tax rate | 5.45% |
Your payroll tax liability is calculated by applying the rate to the wages above your threshold entitlement.
Monthly thresholds and when you must register
Revenue NSW uses monthly thresholds to determine when you must register. For 2025–26, the monthly thresholds depend on the number of days in the month:
| Days in month | Monthly threshold (2025–26) |
|---|---|
| 28 | $92,055 |
| 30 | $98,630 |
| 31 | $101,918 |
When registration is required (plain English)
You must register for payroll tax in NSW if:
- you pay wages in NSW, and
- your total Australian wages exceed the monthly threshold in any month.
Common trap
That "total Australian wages" point is a common trap for growing businesses with staff in multiple states.
How the threshold is reduced
Many businesses don't actually get the full $1.2M threshold in NSW — even if they're not "big" — because the threshold can be apportioned.
Revenue NSW highlights three big reducers:
1. Part‑year employment (started or ceased employing mid‑year)
If you employ for only part of the financial year, your threshold can be reduced based on the number of days you employed staff.
Example (part‑year):
Employ for 184 days in the year
Threshold becomes $1,200,000 × (184 ÷ 365) = $604,931.51
2. Interstate wages (multi‑state employers)
If you pay wages in NSW and other states/territories, your NSW threshold is based on the proportion of your total Australian wages paid in NSW.
Example (interstate proportion):
- NSW wages: $900,000
- Other states: $2,100,000
- Total Australian wages: $3,000,000
NSW threshold: $1,200,000 × ($900,000 ÷ $3,000,000) = $360,000
3. Grouping (only one threshold per group)
If your business is part of a payroll tax group, only one member can claim the threshold in NSW.
Grouping rules
Grouping exists to prevent businesses from splitting payroll across entities to access multiple thresholds.
Key points to know:
- Businesses can be grouped if there is a link between them.
- Only one member of a payroll tax group can claim the annual tax‑free threshold.
- Group structures often require roles like a Designated Group Employer or Group Single Lodger, and some group members may be Non‑Threshold Claimers (meaning they can't claim the threshold).
Get advice early
If you suspect you're grouped (shared owners, common control, related companies, shared employees), treat this as a "get advice early" area — grouping errors are a high‑risk compliance issue.
What counts as "wages" for payroll tax?
Revenue NSW's wage base is broader than "salary" in your payroll system. Wages can include (among other items):
- Gross salaries and wages
- Fringe benefits
- Employer superannuation contributions
- Termination payments
- Contractor payments
- Allowances
- Bonuses and commissions
- Directors' fees
- Shares and options
- Apprentice and trainee wages
Some wages (e.g., certain parental leave payments) can be exempt, and some employers may qualify for exemptions (typically charities, religious institutions, etc.), but exemptions usually require you to meet specific conditions and apply — they're not automatic.
How to calculate NSW payroll tax
A practical "mental model" is:
NSW payroll tax ≈ (NSW taxable wages − NSW threshold entitlement) × 5.45%
(Then adjust for group rules, part‑year, and interstate apportionment as relevant.)
Worked example 1 — NSW‑only employer for full year
- NSW wages: $1,500,000
- Threshold: $1,200,000
- Taxable above threshold: $300,000
Payroll tax: $300,000 × 5.45% = $16,350
Worked example 2 — Multi‑state employer (threshold proportioning)
- NSW wages: $900,000
- Total Australian wages: $3,000,000
- NSW threshold entitlement: $360,000
- Taxable above threshold: $900,000 − $360,000 = $540,000
Payroll tax: $540,000 × 5.45% = $29,430
Worked example 3 — Part‑year employer (threshold reduced)
- NSW wages: $1,500,000
- Threshold entitlement (184 days): $604,931.51
- Taxable above threshold: $895,068.49
Payroll tax: $895,068.49 × 5.45% ≈ $48,781.23
Lodgement and payment dates
Monthly vs annual payments
Revenue NSW states that payment frequency depends on your annual payroll tax liability in NSW:
- More than $20,000 → must pay monthly
- Less than $20,000 → you must lodge an annual return; you may have the option to pay monthly
Due dates (critical rules)
- Monthly payroll tax is generally due 7 days after the end of each month (or next business day if it falls on a weekend/public holiday).
- Annual payroll tax return is due 28 July each year (or next business day).
- June is included in the annual return — there is no separate June monthly return.
Key monthly due dates (FY 2025–26)
| Return month | Due date |
|---|---|
| July 2025 | 7 Aug 2025 |
| Aug 2025 | 8 Sep 2025 |
| Sep 2025 | 7 Oct 2025 |
| Oct 2025 | 7 Nov 2025 |
| Nov 2025 | 8 Dec 2025 |
| Dec 2025 | 14 Jan 2026 (extended) |
| Jan 2026 | 9 Feb 2026 |
| Feb 2026 | 9 Mar 2026 |
| Mar 2026 | 7 Apr 2026 |
| Apr 2026 | 7 May 2026 |
| May 2026 | 8 Jun 2026 |
Step‑by‑step compliance plan
A simple process most small businesses can actually run:
1. Forecast your wages
Forecast your total Australian wages for the year (and your NSW wages). This drives both threshold and registration logic.
2. Check grouping risk
Check grouping risk (shared owners, related companies, common control). If grouped, only one entity may claim the threshold.
3. Register when required
Register when you cross the monthly threshold in any month (don't wait until year end).
4. Map all wages categories
Map all "wages" categories (super, allowances, bonuses, contractors, etc.). Don't assume your payroll "gross wages" report is complete. Regular payroll reconciliation can help identify discrepancies.
5. Use payroll tax online
Pick the right monthly calculation approach (where required) and use Payroll Tax Online.
6. Calendar your lodgements
Calendar your lodgements (monthly + annual). Missing due dates can lead to interest/penalties.
7. Annual return
Do your annual return (by 28 July) even if it's nil (if registered). Include this in your end of financial year payroll checklist.
8. Review exemptions/rebates
Review exemptions/rebates (if relevant). Some employers may be exempt; certain apprentice/trainee arrangements may involve rebates.
Quick compliance checklist
Use this checklist to ensure you're meeting all NSW payroll tax requirements:
Common mistakes (and how to avoid them)
Thinking the threshold is based only on NSW wages: NSW uses total Australian wages in threshold/registration tests, then applies tax calculations in NSW accordingly.
Ignoring grouping: If grouped, you typically don't get "one threshold per entity." It's usually one threshold per group.
Missing contractors, allowances, super, fringe benefits: Payroll tax wages can include a wide range of payments beyond salary.
Getting interstate employee treatment wrong (nexus): When employees work across jurisdictions, payroll tax is allocated using "nexus" rules (often based on where wages are paid/where the largest portion is paid).
Paying June twice (or forgetting it): June is handled in the annual return, not as a separate monthly payment.
Official NSW resources
Key government resources for New South Wales payroll tax compliance:
Revenue NSW
Official guidance on NSW payroll tax thresholds, rates, and compliance
Visit Revenue NSW →Payroll Tax Australia
Cross-jurisdiction comparison of rates and thresholds
Visit portal →Final takeaways
- For 2025–26, NSW payroll tax uses a $1,200,000 annual threshold and a 5.45% rate.
- Registration is triggered by monthly thresholds and uses total Australian wages, not just NSW wages.
- Your threshold entitlement can shrink due to part‑year employment, interstate wages, or grouping (one threshold per group).
- Put lodgement dates in your calendar: monthly due ~7 days after month end, annual due 28 July, and June is handled in the annual return.
Frequently asked questions
- For the 2025–26 financial year in NSW (1 July 2025 to 30 June 2026), the annual payroll tax-free threshold is $1,200,000 and the payroll tax rate is 5.45%.
- If you mean payroll tax, NSW's 2025–26 annual threshold is $1,200,000. If you mean the personal income tax "tax-free threshold", that's a federal rule (not NSW-specific). The ATO explains that Australian residents generally pay no tax on the first $18,200 of income.
- Payroll tax rates and thresholds vary by state/territory (each revenue office sets its own). NSW's rate is 5.45% with an annual threshold of $1,200,000 for 2025–26. For a cross-jurisdiction snapshot, the payrolltax.gov.au "Rates and thresholds" resource lists rates/thresholds for each jurisdiction.
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Simplify your payroll tax compliance
RosterElf keeps accurate time and attendance records that feed directly into payroll—giving you the data you need for payroll tax calculations and compliance.
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