Business SA says the move will make local companies more competitive.
"Lifting the payroll tax threshold is essential if we want to see South Australian businesses prosper and our state grow," Business SA spokesman Anthony Penney said on Thursday.
"Increasing the threshold to $1.5 million would see South Australia no longer have the nation's lowest rate at which it is introduced, which has meant the state has not been able to compete on a level playing field when trying to attract new business."
However, Mr Penney wanted to see the detail of the new policy to ensure all businesses would benefit, and that there would be no disincentives for businesses operating near the threshold to employ additional staff.
Mr Lucas said the government was mindful of that issue and was working on a "phasing system" above the threshold and still believed the cost of the tax cuts could be delivered for the budgeted $45 million a year.
"It will be an important initiative in terms of the creation of jobs," he said.
The tax cut was proposed by the Liberals ahead of the March state election as a major boost to jobs.
Labor went to the poll supporting the existing threshold of $600,000 but Mr Malinauskas said the party would now back the change.
He said the opposition would want to see the details and how the tax cut would be funded, but supported the reform.
"We support, and I support, payroll tax reductions because it should result in more jobs," he said.
"That's good for everybody but particularly good for working families."