The same $80,000 salary costs your business $97,400 in Victoria but $93,200 in Queensland. That's a $4,200 difference for the exact same role, driven entirely by where your employee sits.
Most hiring cost guides give you national averages. But if you're expanding interstate, hiring remote workers, or deciding where to base your next team member, the state-level differences add up fast. Across a 10-person team, choosing the wrong state can cost you $30,000 to $50,000 more per year in mandatory on-costs alone.
This guide breaks down every state and territory so you can see exactly what you'll pay, no matter where your people are based.
Before diving into the state-specific variables, here's the baseline that applies everywhere in Australia.
Superannuation sits at 12 per cent of ordinary time earnings from 1 July 2025. For an $80,000 salary, that's $9,600. From 1 July 2026, Payday Super takes effect, meaning super must be paid at the same time as wages rather than quarterly. This is a significant cash flow change for every employer in every state. Instead of holding super for up to three months and paying in a lump, you'll be paying it every pay cycle.
Annual leave costs 7.7 per cent of salary (four weeks out of 52). Sick and carer's leave adds another 3.8 per cent (10 days per year). Public holidays cost roughly 3.1 to 4.2 per cent depending on your state, since Australia has 8 national public holidays plus state-specific additions.
That baseline alone adds 26.6 to 27.7 per cent to every salary before you hit the state-specific costs. For an $80,000 salary, that's $21,280 to $22,160 in universal on-costs.
Calculate the fully loaded cost of your staff with our free employee cost calculator here.
NSW has the largest business population in Australia at over 891,000 actively trading businesses.
Payroll tax kicks in at a threshold of $1,200,000 in total Australian wages, taxed at 5.45 per cent. If your annual wages bill hits $1.5M, you're paying payroll tax on the full $1.5M, not just the excess above the threshold. The effective rate is reduced by the threshold deduction, but the jump from zero to tens of thousands in payroll tax liability catches many growing businesses off guard.
Workers compensation premiums in NSW increased by approximately 8 per cent for 2025-26 according to icare, with the average premium rate sitting around 1.5 to 1.9 per cent of wages. For an office-based employee earning $80,000, expect to pay $900 to $1,300 annually. For a tradesperson at the same salary, that jumps to $2,500 to $4,000 depending on the specific trade classification.
Long service leave vests after 10 years of continuous service in NSW, with pro-rata access available from 5 years in certain circumstances (such as termination by the employer). The entitlement is 2 months (8.67 weeks) of leave after 10 years.
NSW has no additional state-specific levies beyond payroll tax and workers compensation for most employers.
Victoria is where employment costs start to bite, particularly for growing businesses.
Payroll tax has a threshold of $1,000,000 at a rate of 4.85 per cent. This is the lowest threshold of any mainland state, meaning Victorian businesses start paying payroll tax earlier than their interstate competitors. A business with $1.1M in wages pays payroll tax in Victoria but is still under the threshold in NSW and Queensland.
On top of the standard payroll tax, Victoria applies a mental health and wellbeing surcharge. For businesses with national wages above $10 million, an additional 0.5 per cent applies. Above $100 million, it increases further. For most SMEs this won't apply, but if you're approaching the $10M wages mark through growth, it's another cost to factor in.
Workers compensation premiums in Victoria remained relatively stable for 2025-26, averaging approximately 1.8 per cent of wages. Office-based roles sit around 0.6 to 1.1 per cent. Trades and construction roles range from 3 to 5 per cent.
Long service leave vests after 7 years of continuous service, earlier than most other states. The entitlement is 6.07 weeks after 7 years (calculated as 1/60th of the period of employment). Pro-rata access is available from 7 years on termination. This earlier vesting means your long service leave liability accumulates faster in Victoria.
Queensland offers a more competitive cost structure for employers, particularly on payroll tax.
Payroll tax has a threshold of $1,300,000 at a rate of 4.75 per cent. This is the highest mainland threshold and the lowest mainland rate, making Queensland the most payroll-tax-friendly state for businesses in the $1M to $1.3M wages range. A business that pays $15,000 to $20,000 in payroll tax in Victoria may pay nothing in Queensland.
QLD also applies a mental health levy of 0.25 per cent on wages above $10M. A higher rate of 0.75 per cent applies to wages above $100M. Similar to Victoria's, this won't affect most SMEs but is worth noting for scaling businesses.
Workers compensation premiums in Queensland have been held relatively low, with the average premium rate sitting around $1.34 per $100 of wages (approximately 1.3 per cent). WorkCover Queensland has maintained a premium freeze for several years, making it one of the most competitive jurisdictions. Office-based roles typically sit at 0.5 to 0.9 per cent, while construction and trades range from 2.5 to 4.5 per cent.
Long service leave vests after 10 years of continuous service. The entitlement is 8.67 weeks after 10 years. Queensland also operates a portable long service leave scheme for the building and construction industry, community services, and contract cleaning sectors. If you employ workers in these industries, you make quarterly contributions to the scheme rather than accruing the liability internally.
Queensland has more public holidays than most states, including the Royal Queensland Show (Ekka) holiday for the Brisbane area. This adds an extra day of paid non-productive time for Brisbane-based employees.
WA has been the fastest-growing state for business formation at 4.3 per cent in 2024-25, driven by resources sector strength and population migration.
Payroll tax has a threshold of $1,000,000 at a rate of 5.5 per cent. The rate is the highest of any mainland state, which partially offsets the mid-range threshold. For a business with $1.5M in wages, the WA payroll tax bill will be higher than in NSW, QLD, or SA.
Workers compensation premiums in WA averaged approximately 1.5 to 1.7 per cent of wages. Mining and resources roles attract significantly higher premiums, often 3 to 6 per cent. Office-based roles are comparable to other states at 0.5 to 1.0 per cent.
Long service leave vests after 10 years of continuous service with an entitlement of 8.67 weeks. Pro-rata access is available from 7 years on termination. WA also has a portable long service leave scheme for the construction industry.
SA offers the highest payroll tax threshold of any mainland state, making it attractive for mid-sized employers.
Payroll tax has a threshold of $1,500,000 at a rate of 4.95 per cent. A business with $1.4M in wages pays zero payroll tax in SA but faces bills in every other mainland state except Queensland. For businesses in the $1M to $1.5M wages band, SA is the most competitive mainland state by a significant margin.
Workers compensation premiums in SA averaged approximately 1.5 to 1.9 per cent of wages. ReturnToWorkSA administers the scheme. Office-based roles sit at 0.5 to 1.1 per cent, while trades and manufacturing range from 2.5 to 5 per cent.
Long service leave vests after 10 years with an entitlement of 13 weeks (the most generous of any state). Pro-rata access is available from 7 years. This higher entitlement means SA employers carry a larger long service leave liability per employee than any other state.
Payroll tax has a threshold of $1,250,000 at a rate of 4.0 per cent. The lowest rate in the country, combined with a mid-range threshold, makes Tasmania competitive on payroll tax.
Workers compensation premiums averaged approximately 1.5 to 2.0 per cent of wages through WorkCover Tasmania. Forestry, fishing, and agriculture attract higher premiums reflecting the state's industry mix.
Long service leave vests after 10 years with an entitlement of 8.67 weeks.
Payroll tax has a threshold of $1,500,000 at a rate of 5.5 per cent. The threshold matches SA as the highest in the country, but the rate matches WA as the joint highest.
Workers compensation premiums in the NT averaged approximately 1.5 to 2.0 per cent of wages, with higher rates for mining, construction, and pastoral industries.
Long service leave vests after 10 years with an entitlement of 13 weeks, matching SA as the most generous.
Payroll tax has a threshold of $2,000,000 at a rate of 6.85 per cent. The ACT takes a different approach: the highest threshold in the country but also the highest rate by a considerable margin. Businesses with wages below $2M pay nothing. Above that, the 6.85 per cent rate is substantially higher than any other jurisdiction. An additional surcharge applies for wages above $50 million. For businesses just above the threshold, the effective rate is manageable. For larger employers, the ACT is the most expensive jurisdiction for payroll tax.
Workers compensation premiums averaged approximately 1.5 to 1.8 per cent of wages. The ACT's predominantly white-collar workforce means most employers sit at the lower end.
Long service leave vests after 7 years with an entitlement of 6.07 weeks, matching Victoria's earlier vesting timeline. The ACT also has a portable long service leave scheme covering the building and construction, contract cleaning, community sector, and security industries.
Comparing the three most common business states for a standard office role:
In NSW, the fully loaded cost is approximately $84,500. That's the base salary plus 12 per cent super ($7,800), workers comp at roughly 1.0 per cent ($650), annual leave ($5,005), sick leave ($2,470), and public holidays ($2,535). No payroll tax assuming wages are under $1.2M.
In Victoria, the same role costs approximately $84,800. The workers comp rate is slightly higher at around 1.1 per cent ($715), and long service leave accrues faster due to the 7-year vesting period. No payroll tax assuming wages are under $1M.
In Queensland, the cost drops to approximately $83,900. Lower workers comp at around 0.8 per cent ($520), one extra public holiday for Brisbane-based staff, but the payroll tax threshold is higher so you're less likely to be paying it.
The gap between cheapest and most expensive: roughly $900 per employee per year at this salary level. Across a team of 10, that's $9,000. The gap widens significantly once payroll tax kicks in.
This is where state differences become meaningful because workers comp premiums diverge sharply for higher-risk roles.
In NSW, a construction tradesperson at $90,000 costs approximately $126,000 fully loaded. Workers comp at 3.5 to 4.0 per cent ($3,150 to $3,600) is the big driver on top of the universal on-costs.
In WA, the same role costs approximately $129,500. Workers comp is similar but the payroll tax rate of 5.5 per cent (if you're above the $1M threshold) adds more than NSW's 5.45 per cent.
In Queensland, the cost is approximately $122,000. Lower workers comp premiums and a higher payroll tax threshold combine to create a meaningful saving. The portable long service leave scheme means you pay quarterly contributions rather than accruing the liability, which actually helps cash flow predictability.
The gap between cheapest and most expensive: $7,500 per tradesperson per year. For a construction company with 15 trades staff, that's over $110,000 annually.
This is the example that makes people rethink their setup.
Total base wages: $800,000. Below the payroll tax threshold in every state.
In NSW: Total employment cost approximately $1,032,000. No payroll tax. Workers comp averaging 1.5 per cent across the team. Universal on-costs at roughly 27 per cent.
In Victoria: Total employment cost approximately $1,036,000. No payroll tax (under the $1M threshold). Workers comp at 1.8 per cent. Faster long service leave accrual.
In Queensland: Total employment cost approximately $1,020,000. No payroll tax (well under $1.3M). Lower workers comp. Slightly higher public holiday cost.
In SA: Total employment cost approximately $1,028,000. No payroll tax (well under $1.5M). But the 13-week long service leave entitlement means a larger future liability.
The annual difference between the cheapest state (Queensland at $1,020,000) and the most expensive (Victoria at $1,036,000) is $16,000. Now add two more employees to push you over Victoria's $1M payroll tax threshold, and that gap blows out to $50,000 or more because you're suddenly paying payroll tax on the entire wages bill.
Use our employee cost calculator to model your specific team setup.
If you have employees in more than one state, the complexity multiplies.
Payroll tax is based on total Australian wages but paid to each state where employees perform work. If your total wage bill is $1.1M with $700K in NSW and $400K in QLD, you exceed the Victoria threshold ($1M) and the WA threshold ($1M) even though you have no employees in those states. But more practically, you exceed the threshold in the states where you do have employees: NSW ($1.2M threshold, so you're still under) and QLD ($1.3M, also under). However, if you hired one remote worker in Victoria, your total national wages of $1.1M exceed Victoria's $1M threshold, and you'd owe payroll tax in Victoria on that one employee's wages. Each state calculates your deduction proportionally based on the share of wages in that state.
Workers compensation is governed by the state where the employee usually works, not where your business is registered. A Sydney-based business with a remote employee in Perth needs a WA workers comp policy for that employee. Managing multiple policies across multiple states is an administrative burden that catches many growing businesses off guard.
Long service leave follows the state where the employee is based. If you have team members in Victoria (7-year vesting) and NSW (10-year vesting), you're running two different accrual schedules.
Payday Super from July 2026 adds another layer. With quarterly super, you had time to batch payments. Under Payday Super, every pay run in every state triggers a super payment. For businesses running different pay cycles in different states (weekly for casuals in one state, fortnightly for permanent staff in another), the administrative load increases substantially. Getting it wrong triggers the super guarantee charge, which includes penalties and interest that compound, and can lead to Director Penalty Notices. The ATO has flagged risk-based compliance enforcement from day one of Payday Super.
Review your payroll tax position quarterly, not annually. Many businesses cross a threshold mid-year and don't realise until their accountant tells them at EOFY. By then you owe back-payments plus interest. Monitor your total national wages against each state's threshold every quarter.
Check your workers comp industry classification. Insurers classify your business based on its primary activity, but if your workforce has shifted (for example, from mostly site-based trades to mostly office-based project management), you may be paying a higher premium than necessary. Request a classification review.
Consider your hiring location strategically. If you're hiring a remote employee and the role can be performed anywhere, the state they're based in affects your costs. This isn't about telling people where to live, but when you're choosing between two equal candidates in different states, the cost difference is worth factoring in.
Use contractors where appropriate for project-based work to stay under payroll tax thresholds. But be careful: the ATO and state revenue offices have strict rules about sham contracting, and getting it wrong means back-paying payroll tax plus penalties. Check our contractor vs employee calculator to compare the costs.
Which Australian state is cheapest to employ someone in?
For most SMEs, Queensland offers the best combination of a high payroll tax threshold ($1.3M), a low payroll tax rate (4.75 per cent), and competitive workers compensation premiums. South Australia's $1.5M threshold is higher, but the 13-week long service leave entitlement creates a larger future liability. Tasmania has the lowest payroll tax rate at 4.0 per cent but a smaller labour pool.
When do I need to register for payroll tax?
You must register when your total Australian wages (across all states) exceed the threshold of any state where you have employees. Registration is required within 7 days of exceeding the threshold in most jurisdictions.
Do I pay payroll tax where the employee works or where the business is based?
Where the employee performs the work. If your business is in NSW but an employee works from home in Victoria, that employee's wages are subject to Victorian payroll tax rules. Your national wages are used to calculate the threshold, but the tax is paid to the state where the work is performed.
What happens if I cross the payroll tax threshold mid-year?
You owe payroll tax from the start of the financial year, not from the date you crossed the threshold. Most states allow you to claim a proportional deduction, but the back-payment plus interest can be a significant cash flow hit if you haven't planned for it.
How does workers compensation work for remote employees in another state?
You need a workers comp policy in the state where the remote employee usually performs work. A NSW business with one remote employee in Queensland needs a QLD workers comp policy for that person. Some insurers offer multi-state policies to simplify this.
Is it cheaper to hire casuals to stay under the payroll tax threshold?
Casual wages still count towards your payroll tax threshold. The 25 per cent casual loading is included in the wage figure. Casuals don't reduce your payroll tax exposure; they just change the composition of your costs.
What are the long service leave rules for each state?
The vesting period ranges from 7 years (Victoria and ACT) to 10 years (NSW, QLD, WA, TAS). The entitlement ranges from 6.07 weeks (VIC and ACT after 7 years) to 13 weeks (SA and NT after 10 years). Several states also operate portable long service leave schemes for specific industries.
Do contractors count towards payroll tax?
In most states, payments to contractors can be deemed wages for payroll tax purposes if the contractor is performing work that is essentially employment-like. The rules vary by state and are based on factors like whether the contractor uses your tools, works exclusively for you, or is directed in how to perform the work. Relevant contract payments are included in your payroll tax calculation.
How will Payday Super affect my employment costs?
Payday Super doesn't change the super rate (12 per cent from July 2025), but it changes when you pay it. Instead of quarterly lump sums, you'll pay super with every pay run from July 2026. The total annual cost is the same, but the cash flow impact is significant because you lose the ability to hold super funds for up to three months.
Revenue NSW, Payroll Tax: revenue.nsw.gov.au
State Revenue Office Victoria, Payroll Tax: sro.vic.gov.au
Queensland Revenue Office, Payroll Tax: qro.qld.gov.au
Department of Finance WA, Payroll Tax: wa.gov.au
RevenueSA, Payroll Tax: revenuesa.sa.gov.au
State Revenue Office Tasmania, Payroll Tax: sro.tas.gov.au
Territory Revenue Office NT, Payroll Tax: treasury.nt.gov.au
ACT Revenue Office, Payroll Tax: revenue.act.gov.au
icare NSW, Workers Compensation Premium Rates 2025-26: icare.nsw.gov.au
WorkCover Queensland, Premium Rates: worksafe.qld.gov.au
Safe Work Australia, Workers Compensation Data: safeworkaustralia.gov.au
Fair Work Ombudsman, National Employment Standards: fairwork.gov.au
ATO, Superannuation Guarantee and Payday Super: ato.gov.au
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Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses.Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire - without the recruitment risk, training time, or full-time salary commitment.
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