Payroll tax in Victoria
This page describes the annual calculation for an employer that pays taxable wages throughout the financial year and is not part of a payroll tax group. Part-year employment and grouping can change the threshold and deduction. Victoria levies payroll tax under the Payroll Tax Act 2007 (Vic), with a deduction that phases out and two surcharges for employers with large wage bills. The threshold and rate shown are those for 2025-26 and 2026-27.
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Annual threshold
$1,000,000
- Rate
- 4.85%
Payroll tax, 2026-27
1 July 2026 to 30 June 2027
| What it is | Value | Where it is set |
|---|---|---|
| Annual threshold | $1,000,000 | Sch 1 cl 1, definition of TA, para (g) |
| Australian wages above which the deduction phases out | $3,000,000 | Sch 1 cl 1, definition of APT |
| Phase-out rate of the deduction for Australian wages above that amount | 50% | Sch 1 cl 1, definition of PR, para (b) |
| Rate | 4.85% | Sch 1 cl 1, definition of R, para (h)(ii) |
| Mental health and wellbeing surcharge: Australian wages above | $10,000,000 | Sch 1 cl 1A(1) |
| Mental health and wellbeing surcharge rate on wages above the threshold share | 0.5% | Sch 1 cl 5(1), definition of S, para (b) |
| Second surcharge threshold: Australian wages above | $100,000,000 | Sch 1 cl 1A(2) |
| Surcharge rate on all Victorian wages once Australian wages pass the second threshold, less an amount for each threshold share | 1% | Sch 1 cl 5(1), definition of S, para (c) |
| COVID-19 debt surcharge, equal to the mental health and wellbeing surcharge, for financial years starting before | 1 July 2033 | Sch 1 cl 1B(a) |
Each value is read from the source and provision shown; the sources are listed below. Checked 15 Oct 2026.
Payroll tax, 2025-26
1 July 2025 to 30 June 2026
| What it is | Value | Where it is set |
|---|---|---|
| Annual threshold | $1,000,000 | Sch 1 cl 1, definition of TA, para (g) |
| Australian wages above which the deduction phases out | $3,000,000 | Sch 1 cl 1, definition of APT |
| Phase-out rate of the deduction for Australian wages above that amount | 50% | Sch 1 cl 1, definition of PR, para (b) |
| Rate | 4.85% | Sch 1 cl 1, definition of R, para (h)(ii) |
| Mental health and wellbeing surcharge: Australian wages above | $10,000,000 | Sch 1 cl 1A(1) |
| Mental health and wellbeing surcharge rate on wages above the threshold share | 0.5% | Sch 1 cl 5(1), definition of S, para (b) |
| Second surcharge threshold: Australian wages above | $100,000,000 | Sch 1 cl 1A(2) |
| Surcharge rate on all Victorian wages once Australian wages pass the second threshold, less an amount for each threshold share | 1% | Sch 1 cl 5(1), definition of S, para (c) |
| COVID-19 debt surcharge, equal to the mental health and wellbeing surcharge, for financial years starting before | 1 July 2033 | Sch 1 cl 1B(a) |
Each value is read from the source and provision shown; the sources are listed below. Checked 15 Oct 2026.
How it works in Victoria
- State Revenue Office Victoria administers the tax. Nothing is payable for a financial year unless the employer's wages across Australia exceed the annual threshold, and only wages paid in Victoria are taxed there.
- The deduction begins at the threshold. An employer that also pays wages interstate keeps only the Victorian portion of it, in proportion to its Victorian wages out of its Australian total.
- Above the phase-out point in the table, the deduction is cut by the phase-out rate applied to Australian wages over that point, multiplied by the Victorian share of Australian wages, until nothing is left. Victorian wages above the deduction are taxed at the general rate.
- The mental health and wellbeing surcharge starts once Australian wages pass its own threshold. It falls on Victorian wages above Victoria's share of that threshold, unreduced by the deduction, with a further amount added above the second threshold.
- A second surcharge, the temporary COVID debt surcharge, equals the mental health and wellbeing surcharge for every financial year that begins before the date in the table.
- None of these settings moved between 2025-26 and 2026-27. Eligibility for Victoria's separate regional employer rate depends on where employees work or live, so that rate is not in the tables.
General information
Sources
- Payroll Tax Act 2007 (Vic), Authorised Version No. 041
Office of the Chief Parliamentary Counsel Victoria. Authorised Version No. 041, as at 1 May 2026, released 1 May 2026. Checked 15 October 2026.
© State of Victoria (Government Printer) Licence: Victorian Legislation copyright notice: copyright, State of Victoria.
- Payroll tax
State Revenue Office Victoria. Page updated 24 August 2026 (last_update_date metadata), released 24 August 2026. Checked 15 October 2026.
© State of Victoria (State Revenue Office), licensed under CC BY 4.0 Licence: CC BY 4.0.
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