Quick answer
The Victorian payroll tax rate is 4.85%, charged on annual Australian wages over a $1 million threshold (about $83,333 a month). Employers paying 85% or more of their Victorian wages to staff based mainly in regional Victoria pay 1.2125% instead. A Melbourne business with $1.4 million in wages owes roughly $19,400 a year; the same payroll in Bendigo owes roughly $4,850.
Key points
- Standard rate is 4.85%; the regional rate is 1.2125%, both applying from 1 July 2025 and still current
- The tax-free threshold is $1m a year, or $83,333 a month, and it phases out between $3m and $5m of wages
- Returns are monthly, due on the 7th of the next month, and nil returns still have to be lodged
- June isn't a monthly return: it's reconciled in the annual return due 21 July
- The election promises (a $1.2m threshold by 2028–29) are pledges, not law
The Victorian payroll tax rate is 4.85% on annual Australian wages over a $1 million threshold. If 85% or more of your Victorian wages go to staff working mainly in regional Victoria, the rate drops to 1.2125%. Those settings came in on 1 July 2025 and, per the State Revenue Office (SRO), are still the current ones. Here’s what that means when a real bill turns up.
What are the current Victorian payroll tax settings?
The SRO’s current rates page, updated 29 September 2026, lists what has applied since 1 July 2025:
| Item | Current setting |
|---|---|
| Standard rate | 4.85% |
| Regional rate | 1.2125% |
| Annual deduction (threshold) | $1,000,000 |
| Monthly deduction | $83,333 |
| Phase-out | $3m to $5m of annual wages, at 50% |
| Surcharges | Only for national wages above $10m |
Until 30 June 2025 the Victorian figure was $900,000, so any page still quoting it is stale. The 2026–27 Budget left the rates alone, and the pledges now being made ahead of polling day on 28 November are covered in our Victorian election tax guide. Until legislation passes, plan on today’s numbers.
How Victoria sits against other states is on the state-by-state thresholds page. The short version: Victoria’s threshold is below Queensland’s and NSW’s, but its regional rate is the lowest in the country.
What will my first payroll tax bill look like?
Only the slice of wages above the line is taxed. Subtract $1m from your annual wages and multiply the remainder by 4.85%.
Illustrative example: a Melbourne restaurant group in Richmond and Collingwood pays $1.4 million in wages across the year, including super and bonuses.
- Wages over the line: $400,000
- Annual bill at 4.85%: $19,400
- Roughly $1,617 a month once you’re running at that level
That’s a modest-looking number, but it lands in the same week as BAS, PAYG withholding and super, and it’s a permanent new cost, not a one-off. Hospitality and retail owners tend to feel it in the first quarter after a hiring push, particularly if the extra staff were hired ahead of the revenue.
How much does the regional rate save?
Illustrative example: a Bendigo building and fit-out firm pays $1.4 million in wages, with 85% or more going to staff working mainly in regional Victoria.
- Wages over the line: $400,000
- Annual bill at 1.2125%: $4,850
Same payroll, about $14,550 a year less than the Melbourne business. That’s why owners hovering near the 85% line think hard about where the next hire will work. Miss the test and the standard rate applies to all your Victorian wages, not just the metro slice. Our regional payroll tax guide shows how the test works and where it catches people out.
Does the $1m threshold always apply in full?
No, and this is the detail most Victorian explainers skip. The deduction phases out for larger payrolls:
- Up to $3m in wages, you keep the whole $1m deduction.
- From $3m to $5m, you lose 50 cents of deduction for every extra dollar of wages.
- At $5m and over, the deduction is gone and every dollar is taxed.
Illustrative example: a Geelong logistics group pays $4 million in taxable Australian wages.
- Wages over $3m: $1 million
- Deduction lost: $500,000, leaving a $500,000 deduction
- Taxable wages: $3.5 million
- Bill at 4.85%: $169,750
Without the phase-out the bill would have been $145,500, so the phase-out costs this group about $24,250 a year. The SRO applies the phase-out to groups as well as single employers, so if you’re related to other businesses, wages are combined first. Our grouping letter guide explains how that happens.
If a growing payroll is about to stretch your cash, check your options early. It’s a short enquiry and your credit file isn’t touched just for asking.
Who has to register, and when?
Registration is required once wages you pay for work done in Victoria push your Australian payroll past the threshold. Treat $83,333 in a month as your early-warning line. The SRO’s registration page warns that missing registration can bring penalties or interest, but it doesn’t set a number of days, so register as soon as you know you’re over rather than waiting for the year to close.
“Wages” is wider than the pay run. Bonuses, commissions, director fees, allowances, employer super and some contractor payments can all count. The registration checklist lists what to add up, and the payroll tax checker gives a quick read on where you stand.
What are the Victorian lodgement and payment dates?
Most employers are on a monthly cycle. Return and payment both fall due a week into the following month. When day seven is a Saturday, Sunday or public holiday, you get until the next working day. A month with no tax still needs a nil return, and that’s the trap for owners with a quiet month.
June works differently. It isn’t lodged as a monthly return; it’s covered in the annual reconciliation, which the SRO sets for 21 July. That’s a week earlier than the NSW date, so don’t assume dates carry across the border. Lodging late can cost you extra tax and interest.
Two Christmas-period dates to diarise: the December return falls due on 7 January 2027, a time when many hospitality and trade businesses are cash-light after a shutdown, and the January return is due on 8 February 2027 because 7 February is a Sunday.
What happens at the larger end?
Only large payrolls meet these. Once national wages pass $10 million, two extra charges are layered over the standard rate: a mental-health surcharge that began in January 2022, and a temporary COVID-19 debt surcharge that runs to 30 June 2033. Between them they add 1% on the Victorian portion of wages once national payroll tops $10m, and a further percentage point past $100m. A business paying under $10 million nationally can skip this section.
What mistakes cost Victorian owners the most?
Three come up again and again, and none of them needs a lawyer to avoid.
Counting only the pay run. Super, bonuses, allowances and fringe-style payments can lift a $950,000 payroll over the line without anyone noticing. Fit-out contractors, labour hire and hospitality groups using a lot of casuals are the usual victims.
Assuming a head office in the country earns the regional rate. It’s where your people work that matters. A Ballarat head office with half its crew on Melbourne sites won’t pass the 85% test. A Melbourne head office with 90% of wages going to staff in Gippsland might.
Filing late because the cash isn’t there. Lodging and paying are separate jobs. If a return is due and money is tight, lodge it on time and talk to the SRO about the payment, rather than leaving both undone and letting penalty tax and interest stack up.
What should you do before crossing the threshold?
- Add up wages monthly, with super, against $83,333.
- Check grouping. Related entities share one threshold.
- Test the regional rate if your staff are spread between Melbourne and a country town.
- Check the phase-out if you’re heading past $3m.
- Open a payroll tax savings account and set aside a fixed percentage of each pay run.
- Diarise the 7th of each month and 21 July, not just BAS dates.
- Review each July and whenever you open a site, win a large contract or restructure.
For the wider Victorian picture, including the commercial property tax switch and Business Victoria support, see our Victoria hub, the Melbourne page and the Geelong page.
How do you price payroll tax into a quote?
Treat it as a percentage on top of wages, not an overhead you absorb. At the standard rate, each extra $100,000 of wages above the threshold adds $4,850 a year. At the regional rate, the same $100,000 adds about $1,213. Divide that by the hours the work will take, and add it to the labour line of the quote. Owners who skip this step find out in the first return that their margin on the new contract is thinner than the spreadsheet said. It matters most for fixed-price work and long-term contracts where the price can’t be revisited.
When does finance make sense around payroll tax?
A payroll tax bill is the price of growth, and growth needs working capital before it pays back. Common uses are carrying wages for new staff on a contract that pays in arrears, smoothing the first few returns, fitting out a second site, and bridging a seasonal dip. Unsecured and line-of-credit options for trading businesses typically run from $5,000 to $500,000, sized on turnover and bank statements. Where there’s property to offer as security, lending runs from $20,000 to $5,000,000.
A bigger payroll is a good problem. Let’s make sure the cash keeps up.
If you’re about to hire, open a second site or cross the $1 million line, tell us where you stand. The enquiry takes about 60 seconds and won’t affect your credit score, because there’s no credit check when you first ask. We don’t pass your details around a pile of lenders either; one team reads it, and a real person who understands Victorian business will phone you to talk through what might fit. Please fill the form in accurately, with real turnover and wage figures, so we can match the right option first time.
Frequently asked questions
What is the payroll tax rate in Victoria?
4.85% for the standard rate and 1.2125% for eligible regional employers, according to the State Revenue Office's current rates page, which covers the settings in force since 1 July 2025. The 2026–27 State Budget left both unchanged.
What is the Victorian payroll tax threshold?
$1 million of annual taxable Australian wages, which the SRO expresses as $83,333 a month. The Victorian figure was $900,000 before 1 July 2025.
Do I get the full $1m threshold if my wages are high?
Only up to $3m of wages. From there the deduction shrinks by 50 cents per extra dollar and reaches zero at $5m, so a $4m payroll keeps a $500,000 deduction.
How do I qualify for the 1.2125% regional rate?
Pay 85% or more of your Victorian wages to people who work mainly in regional Victoria. Your head office address doesn't decide it. Our regional payroll tax guide covers how the 85% test works and the traps around a single city hire.
When are Victorian payroll tax returns due?
On a monthly cycle, lodge each month and pay any tax by the 7th of the next month, or the next business day if the 7th falls on a weekend or public holiday. A return is needed even if you owe nothing that month. The annual reconciliation is due by 21 July.
Are there extra payroll tax charges for large Victorian employers?
Yes, but only for very big payrolls. A Mental Health and Wellbeing surcharge and a temporary COVID-19 debt surcharge start once national wages pass $10m, and together come to 1%, rising to 2% above $100m. Small and mid-sized employers never meet them.
Can a business loan help cover payroll tax?
It can help with timing, for example while a new contract or a second site is ramping up and invoices are still being paid on 30 or 45 day terms. Whether it fits depends on your turnover, trading history and what you're funding.