State and Territory Tax in Australia — Land Tax, Payroll Tax, and More
This article provides general information only and does not constitute financial advice. For advice tailored to your situation, consult a licensed financial adviser. Learn more.
Contents
Australia has a three-tier tax system: federal (Commonwealth), state and territory, and local government. While the ATO administers income tax and GST on behalf of the Commonwealth, each state and territory runs its own revenue authority collecting taxes on property, employment, insurance, motor vehicles, and gambling. For property investors and employers, state taxes can be a significant cost that varies enormously depending on where you operate.
The Major State and Territory Taxes
Land Tax
Land tax is an annual tax on the unimproved value of land you own — excluding your principal place of residence in most states. It is one of the most significant recurring costs for property investors with multiple properties.
How it works: Each state applies a threshold below which no land tax is payable, then a marginal rate structure above it. Land values are assessed annually by the state valuation authority (e.g., NSW Valuer General, VIC Valuer-General Victoria).
Current rates and thresholds (approximate, FY2025–26):
| State | Tax-free threshold | Rate above threshold |
|---|---|---|
| NSW | $1,075,000 | 1.6%; premium 2.0% over $6.571M |
| VIC | $300,000 | 0.2%–2.55% (marginal) |
| QLD | $600,000 (individuals) | 1.0%–2.75% |
| WA | $300,000 | 0.25%–2.67% |
| SA | $481,000 | 0.5%–2.4% |
| ACT | No threshold; broad-based land tax | ~1.24% of AUV |
| TAS | $100,000 | 0.55%–1.5% |
| NT | No general land tax | — |
Thresholds are indexed annually. Trusts and companies often have lower or no thresholds. Verify current rates with your state revenue office.
Key exemptions: Your principal place of residence (PPOR) is generally exempt in all states except the ACT (which applies a broad-based levy). Primary production land and some charitable uses are also commonly exempt.
Land tax reform is an ongoing policy debate in Australia — some economists and tax reviews (including the Henry Tax Review) have argued for replacing stamp duty with a broader annual land tax, which ACT has progressively implemented since 2012.
Payroll Tax
Payroll tax is a state and territory tax on employer wages above a jurisdiction-specific threshold. It applies to businesses with total Australian wages (for grouping purposes) above the threshold, and is calculated on the excess.
Current payroll tax rates and thresholds (approximate, FY2025–26):
| State/Territory | Annual threshold | Rate |
|---|---|---|
| NSW | $1,200,000 | 5.45% |
| VIC | $700,000 | 4.85% (4.85% standard; 6.85% regional exemption applies) |
| QLD | $1,300,000 | 4.75% (standard); higher rates for larger payrolls |
| WA | $1,000,000 | 5.5% |
| SA | $1,500,000 | 4.95% |
| TAS | $1,250,000 | 4.0% |
| ACT | $2,000,000 | 6.85% |
| NT | $1,500,000 | 5.5% |
Grouping provisions: If related businesses (under common ownership or control) operate across multiple entities, their wages are aggregated for threshold purposes. This is a common audit focus — businesses operating through multiple ABNs need to understand grouping.
Medical practitioners: Several states have recently clarified or amended payroll tax treatment of contractor doctors and dentists operating within medical practices — this has been an area of significant compliance activity.
Stamp Duty (Transfer Duty)
Stamp duty — formally called transfer duty — is a tax on the transfer of property. It is calculated as a percentage of the purchase price or market value (whichever is higher) and paid by the buyer at settlement.
Stamp duty is the largest state tax for most Australians — it typically represents 3–5% of the purchase price and adds $15,000–$60,000+ to the upfront cost of buying property.
Stamp duty reform: The ACT has progressively replaced stamp duty with increased land tax. NSW introduced an optional land tax scheme for some buyers. This is an area of ongoing state policy debate.
For detailed stamp duty rates by state, see the Mortgages stamp duty guides.
Insurance Duty
Most states levy a duty of approximately 10% on insurance premiums for general insurance (home, car, contents, business insurance). This is an embedded cost — the insurance company pays it and passes it on in the premium. NSW, VIC, and QLD levy the highest insurance duties. SA and ACT have moved to reduce or abolish insurance duty as part of broader tax reform.
Frequently Asked Questions
Do all states in Australia have land tax? No — the Northern Territory has no general land tax. The ACT applies a broad-based property levy. All other states apply land tax on investment properties above a threshold, with principal place of residence generally exempt.
What is payroll tax and who has to pay it? Payroll tax is a state tax paid by employers with total wages above the state threshold. It is calculated on the excess of wages over the threshold at the applicable state rate. Smaller businesses typically fall below the threshold — in NSW, for example, businesses with annual wages below $1.2 million are exempt.
Is stamp duty deductible in Australia? Stamp duty on a rental property purchase is not immediately deductible — it forms part of the cost base of the property and reduces your capital gain when you sell (reducing CGT). Stamp duty on a business property may be deductible as a business cost depending on circumstances. Stamp duty on your primary residence is not deductible.
State tax law changes frequently. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register.