The Berejiklian Government has revealed another entrée ahead of Tuesday's state budget main course, announcing New South Wales' payroll tax threshold will be lifted from $750,000 to $1 million.

The announcement, described as a "modest step" by NSW Labor but welcomed by the Small Business Commissioner, will see the threshold rise to $850,000 in 2018-19 and then in $50,000 increments until it reaches $1 million.

The Government expects 40,000 businesses in NSW — 60 per cent of which are in Sydney — will have their payroll bill reduced.

It forecast 5,000 businesses are set eventually pay no payroll tax at all.

Launching the policy in the Western Sydney suburb of North Ryde today, Treasurer Dominic Perrottet said it would deliver $881 million in savings for business over four years.

"Behind every small business is a man, a woman, a family wanting to get ahead and make a difference," the Treasurer said today.

"And this I believe will make a significant impact to assist them in bringing on more staff, or importantly reinvesting in their businesses."

Payroll tax is levied on all NSW businesses once their payroll passes a certain amount.

The Berejiklian Government expects to bank nearly $9 billion from payroll tax this financial year, making it NSW's second-biggest source of tax revenue, behind transfer duty.

Describing the move as a "modest step", Opposition Leader Luke Foley said it was a reversal of a policy that the Berejiklian Government itself brought in.

NSW Opposition Leader Luke Foley described it as a "modest step". ( AAP: Carol Cho )

"This government removed indexation when it came to payroll tax only five years ago... it's a problem they created," he said.

But NSW Small Business Commissioner Robyn Hobbs was glowing in her praise of the policy, telling the ABC payroll tax was something that had long-needed reform.

"This is a fantastic announcement," she said.

"This has always been something that small businesses in particular have felt has restricted their growth.

"The wonderful thing about this is that people can employ more people, and rather than the threshold cutting in as it has been at $750,000, that will move to $850,000, then $1 million.

"So for many businesses you can employ extra people, you can actually help you business grow through all of that."