If you’re running a business in New South Wales, you’ve probably noticed payroll tax chewing into your bottom line. But here’s the sting: even if your headcount hasn’t changed, you could still be paying more. Why? Bracket creep.
The payroll tax threshold has been frozen at $1.2 million since 2020. Meanwhile, wages have risen—driven by inflation, skills shortages and award increases. This means more businesses are being pushed into higher tax brackets, and those already paying are shelling out more. The NSW Government expects to pocket an extra $128 million in 2025–26 from this stealthy increase.
What Does this Mean for You?
For mid-sized businesses with 10–100 staff, payroll tax is often one of the largest recurring costs. With the threshold unchanged, wage growth alone can nudge you into a higher tax liability—even without expanding your team.
The Risks:
- Less cash available for reinvestment in growth.
- Tighter margins when paired with rising superannuation and compliance costs.
- Increased administrative complexity, especially if you operate across states.
What Can You Do?
Planning is everything. Accurate payroll forecasting helps you anticipate changes before they bite. Salary structuring and workforce planning can also ease the load, ensuring you’re not overpaying through errors or inefficiencies.
At iKeep, we’re already seeing NSW clients caught off guard by bracket creep. The good news? With the right systems, payroll doesn’t have to be a profit-drain. By reviewing payroll regularly and using automation where possible, you can keep compliance watertight while minimising the risk of nasty surprises.
The Takeaway
Payroll tax bracket creep isn’t going away anytime soon. The best defence is a proactive payroll strategy—because in business, the real trap is waiting until it’s too late.
