Victorian payroll tax for 2026-27 is 4.85% of taxable wages above a $1,000,000 annual threshold, or $83,333 a month. The part most employers miss is that the threshold does not stay at $1 million. It starts shrinking once your Australian wages pass $3 million and is gone at $5 million.
Published: November 2026
If you run payroll in Victoria, this is the tax that arrives without a letter. Nobody tells you when you cross the line. If you would rather have someone watching it for you, see our Melbourne bookkeeping services.
Payroll tax is a state tax on the wages an employer pays. In Victoria it is administered by the State Revenue Office (SRO). It is self-assessed, which means you work out whether you are liable, register, lodge and pay without being asked.
It is charged on taxable wages, which is wider than salary. Super contributions, bonuses, commissions, allowances, fringe benefits and some contractor payments all count. Our guide to payroll tax on contractors covers that last group.
The SRO lists these rates as applying from 1 July 2025 onward, so they carry through 2026-27. You can compare every state in our state-by-state payroll tax thresholds and rates guide.
You need to register when you pay wages in Victoria and your total Australian wages go over the monthly threshold of $83,333. The test uses Australian wages, not just Victorian wages, and it uses the wages of your whole group if you are grouped with other businesses.
Two points catch employers out:
Registration, returns and payment all run through the SRO's PTX Express portal.
The $1 million threshold is technically a deduction. From 1 July 2025 the deduction reduces by 50 cents for every dollar of Australian wages above $3 million. At $5 million it reaches nil.
The calculation for a Victorian-only employer:
Worked example 1: $2,000,000 in Victorian wages.
Wages are under $3 million, so the full deduction applies.
$2,000,000 less $1,000,000 = $1,000,000 taxable.
$1,000,000 x 4.85% = $48,500 for the year.
Worked example 2: $4,000,000 in Victorian wages.
Reduction: 50% x ($4,000,000 less $3,000,000) = $500,000.
Deduction: $1,000,000 less $500,000 = $500,000.
Taxable: $4,000,000 less $500,000 = $3,500,000.
$3,500,000 x 4.85% = $169,750 for the year.
Worked example 3: $5,000,000 in Victorian wages.
No deduction applies.
$5,000,000 x 4.85% = $242,500 for the year.
Between $3 million and $5 million, every extra dollar of wages costs more than 4.85 cents in payroll tax, because you pay the rate on the new dollar and lose 50 cents of deduction as well. That works out to 7.275 cents on each extra dollar of wages in that band. It is worth knowing before you approve a headcount plan that takes you from $2.9 million to $3.5 million.
To test your own numbers, use our payroll tax threshold calculator or the SRO's threshold calculator.
Regional Victorian employers pay 1.2125% instead of 4.85%. The SRO sets the conditions on its regional employers page. Broadly, the business needs to be based in regional Victoria and pay most of its Victorian wages to people who work mainly in regional Victoria.
On $2,000,000 of wages, a qualifying regional employer pays $1,000,000 x 1.2125% = $12,125, against $48,500 at the metropolitan rate. If you have moved operations out of Melbourne, or most of your team works from a regional site, check the SRO criteria before your next return.
Two surcharges sit on top of payroll tax for larger employers:
Both are worked out the same way. An employer with Australian wages above $10 million pays a combined 1%. Above $100 million the combined rate is 2%. The surcharges apply only to the Victorian share of wages over those thresholds.
Example: a Victorian-only employer with $12,000,000 in wages pays the surcharge on the $2,000,000 above the first threshold. $2,000,000 x 1% = $20,000, on top of ordinary payroll tax.
If you also pay wages in other states, you do not get the whole Victorian deduction. You get the Victorian share of it.
Example: $600,000 of Victorian wages and $1,400,000 of NSW wages, $2,000,000 in total.
Victorian share: $600,000 divided by $2,000,000 = 30%.
Victorian deduction: $1,000,000 x 30% = $300,000.
Victorian payroll tax: ($600,000 less $300,000) x 4.85% = $14,550.
You would also be registered and paying in NSW on the NSW share. See our NSW payroll tax guide for that side.
For groups, one member is nominated as the designated group employer and claims the deduction for the whole group. The other members pay on every dollar.
Once registered you lodge a return and pay each month, due on the 7th of the following month. There is no separate June return. June is picked up in the annual reconciliation, which is due on 21 July.
The annual reconciliation is where the year is trued up: actual wages for the year, the final deduction after any phase-out, interstate wages and grouping. Monthly returns use the monthly threshold, so employers with uneven payroll often find they have over or underpaid by June.
This is ordinary monthly work for a managed payroll function. Our outsourced payroll services cover registration, monthly returns and the annual reconciliation for employers in every state.
What is the payroll tax threshold in Victoria for 2026-27?
$1,000,000 a year, or $83,333 a month. The threshold reduces once Australian wages pass $3 million and is nil at $5 million.
What is the payroll tax rate in Victoria?
4.85% for most employers and 1.2125% for eligible regional Victorian employers.
Do I pay payroll tax on all my wages once I cross $1 million?
No. You pay on wages above your deduction. For employers under $3 million in Australian wages, that means wages above $1,000,000.
Does super count as wages for Victorian payroll tax?
Yes. Employer super contributions are taxable wages, along with bonuses, commissions, allowances and fringe benefits.
When is Victorian payroll tax due?
Monthly returns are due on the 7th of the following month. The annual reconciliation is due 21 July.
Do contractors count towards Victorian payroll tax?
Some do. Payments under certain contracts are treated as wages unless an exemption applies. The SRO publishes the contractor rules and exemptions.
What happens if I should have registered and did not?
The SRO can assess the unpaid tax and add interest and penalty tax. Voluntary disclosure before the SRO makes contact is treated more favourably than being found in an investigation.
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We review and check this guide periodically. At the time of writing (November 2026), all information was current. Scale Suite is a registered BAS Agent, not a licensed tax advisor or financial advisor. This content is general information only and does not constitute professional tax, financial, or legal advice. Some details may change over time.
Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
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