NSW Payroll Tax Calculator 2025-26 | Threshold & Grouping

How NSW payroll tax works in 2025-26

NSW payroll tax is the state tax that Revenue NSW charges on the wages an employer (or a group of related employers) pays for work performed in NSW. Unlike PAYG withholding, payroll tax is paid by the employer out of the business — it is not deducted from the employee's pay packet. The 2025-26 NSW payroll tax year runs 1 July 2025 – 30 June 2026, with monthly returns lodged through Revenue NSW Online Services and an annual reconciliation submitted at the end of the financial year.

Three design choices shape the NSW bill:

1. A $1.2 million tax-free threshold, set at the per-group annual level rather than per entity.
2. A flat 5.45% rate on taxable NSW wages above the threshold — currently the highest standard rate among the harmonised states.
3. Threshold apportionment and grouping rules that share a single threshold across related entities and reduce the NSW threshold when wages are also paid in other Australian states.

This calculator estimates the standard 5.45% liability for a single employer or simple group. It does not model the 0.5% mental health levy that applies to wages above $10 million for the largest employers, which sits on top of the standard calculation.

The $1.2 million threshold and 5.45% rate

From 1 July 2025 the annual NSW payroll tax threshold is $1,200,000, with an equivalent monthly threshold published as $100,000. Revenue NSW charges payroll tax only on the portion of taxable NSW wages above the threshold. An employer paying $1.5 million of NSW wages with no interstate operations is taxed on the $300,000 above the threshold, so the typical bill is around $300,000 × 5.45% = $16,350 for the year.

NSW currently has the highest standard payroll tax rate among the harmonised states:

State	Standard rate	Annual threshold
NSW	5.45%	$1.20m
VIC	4.85% (metro) / 4.95% (regional)	$1.00m
QLD	4.75% / 4.95% (above $6.5m wages)	$1.30m

NSW does not offer a regional employer rate, so a NSW-only employer with wages spread between Sydney and regional NSW pays the same 5.45% on the whole taxable amount. Confirm the current rate against the Revenue NSW thresholds and rates page before lodging.

Why the monthly threshold is simplified to $100,000 here

Revenue NSW publishes the monthly threshold as $100,000 — the rough monthly equivalent of the $1.2 million annual figure. In practice the official Revenue NSW monthly return tool varies the deduction by days in the month, with around $98,630 for a 30-day month and around $109,589 for a 31-day month. Each monthly return uses the day-based deduction rather than the flat figure.

This calculator uses the simplified flat $100,000 monthly threshold for the headline estimate. The annual figure produced is the binding number for the financial year because the annual reconciliation re-runs the calculation at year-end on the full-year wages and threshold. For the binding monthly instalment, use the official Revenue NSW payroll tax calculator or your accounting platform — both will apply the day-based threshold automatically.

Interstate wages and threshold apportionment

NSW payroll tax is calculated on NSW wages, but the threshold is shared across Australia. Where an employer (or a group of related employers) pays wages in more than one Australian state or territory, Revenue NSW reduces the NSW threshold in proportion to the NSW share of total Australian wages of the group:

Effective NSW threshold = $1,200,000 × (NSW wages ÷ group total Australian wages).

For example, an employer with $900,000 of NSW wages and $1.5 million of total Australian wages receives only 60% of the headline threshold ($720,000) before tax is calculated. Wages paid wholly outside NSW are not subject to NSW payroll tax in their own right, but they still feed into the apportionment fraction. The same harmonised principle is applied across NSW, VIC and QLD — see Revenue NSW's interstate wages guidance for the formal definitions.

Grouping rules: when entities share one threshold

Two or more entities are treated as a single group for NSW payroll tax where they share common employees, common control, or a tracing relationship through interposed entities. The group then shares one $1.2 million threshold across the whole group rather than each entity claiming its own.

The mechanics are:

• A designated group employer (DGE) is nominated to claim the threshold on monthly returns; other group members lodge nil-threshold returns.
• The group total Australian wages are used to apportion the threshold by NSW share before any single member claims it.
• Two related companies — one paying $800,000 of NSW wages, the other paying $600,000 of NSW wages — would together be treated as a $1.4 million NSW group, with $200,000 above the shared threshold and approximately $10,900 of payroll tax for the year, rather than each claiming a separate threshold and paying nothing.

For a small NSW operation inside a larger national group, the combined effect of grouping and interstate apportionment can mean very little of the threshold is usable in NSW. An entity with $800,000 of NSW wages inside a $5 million national group has an apportioned NSW threshold of $1.2m × (800k / 5m) = $192,000, taxable wages of $608,000, and a typical bill of around $33,136 for the year — even though the standalone $800,000 figure sits well below the $1.2 million headline threshold.

Worked examples

1. Single-state NSW employer, $2 million of wages. Threshold ($1.2m) is unreduced. Taxable wages = $800,000. Tax = $800,000 × 5.45% = $43,600 for the year, or about $3,633 a month. Annual liability is well above the $20,000 trigger, so monthly returns are required.

2. Multi-state employer, NSW $900k / interstate $600k / group $1.5m. NSW share = 60%. Effective threshold = $1.2m × 0.6 = $720,000. Taxable NSW wages = $900,000 − $720,000 = $180,000. Tax = $9,810 for the year. Annual liability is below $20,000, so an annual return is generally allowed instead of monthly returns.

3. Small NSW slice of a large group, NSW $800k / group $5m. NSW share = 16%. Effective threshold = $1.2m × 0.16 = $192,000. Taxable NSW wages = $800,000 − $192,000 = $608,000. Tax = $33,136 for the year, or about $2,761 a month. The headline NSW figure ($800k) is below the threshold, but apportionment by group size pulls the effective threshold down sharply.

Common pitfalls

• Forgetting the threshold is shared across Australia. A national employer who plugs only NSW wages into the threshold (without entering group total Australian wages) will overstate the tax-free amount and understate the bill.
• Confusing the entity figure with the group figure. The threshold is shared once across the whole group of related entities, not granted to each entity. Two related companies share one $1.2 million threshold, not two.
• Treating the $100,000 monthly threshold as exact. The official Revenue NSW tool varies the monthly threshold between roughly $98,630 and $109,589 by days in the month. Use the official tool or your payroll platform for the binding monthly figure.
• Missing the $20,000 monthly-return trigger. Annual liability above $20,000 generally requires monthly returns; below that, an annual return is usually allowed. The exact rules sit in the Revenue NSW help centre — payroll tax guidance.
• Confusing PAYG and payroll tax. PAYG withholding is deducted from the employee's pay and remitted to the ATO. Payroll tax is an employer-paid state tax assessed on the gross wage bill — they are independent obligations.

When to talk to a registered tax agent

This calculator gives a general estimate based on Revenue NSW's published 2025-26 threshold and rate. Binding assessments — especially involving complex group structures, contractor inclusion tests, employment agency provisions, the 0.5% mental health levy on the largest employers, partial-year operations, or an exemption — should go through a registered tax agent or payroll specialist. For the exact assessment, contact Revenue NSW or use Revenue NSW Online Services. Nothing on this page is personal tax, legal or financial advice.

Related calculators

• VIC Payroll Tax Calculator — Victorian threshold, 4.85%/4.95% metro and regional rates, and the $3m-$5m phase-out.
• QLD Payroll Tax Calculator — Queensland threshold, 4.75%/4.95% rates and the Mental Health Levy.
• Redundancy Pay Calculator (AU) — Fair Work redundancy pay scale by years of continuous service.
• Salary Sacrifice Super Calculator — model the effect of pre-tax super contributions on take-home pay.

Sources:

• Revenue NSW — Payroll tax thresholds and rates
• Revenue NSW — Lodge and pay your monthly return
• Revenue NSW — Interstate wages
• Revenue NSW — News and media releases
• Revenue NSW — Help centre: online services for payroll tax