Payroll tax in Victoria is 4.85% of taxable wages above the tax-free threshold, which has been $1 million a year ($83,333 a month) since 1 July 2025. Regional employers pay 1.2125%. The threshold shrinks for groups with Australian wages between $3 million and $5 million and disappears above $5 million, and two surcharges add up to 2% for the largest payrolls.
It's a state tax collected by the State Revenue Office (SRO), so the rules below are Victoria's, not the ATO's. Everything here comes from the SRO's payroll tax pages, checked in October 2026; the current rates page was updated 29 September 2026.
Rates and thresholds from 1 July 2025
| Item | Figure, as of October 2026 |
|---|---|
| Standard rate | 4.85% |
| Regional employer rate | 1.2125% |
| Annual tax-free threshold (maximum deduction) | $1,000,000 (was $900,000) |
| Monthly threshold | $83,333 (was $75,000) |
| Phase-out band | Australian taxable wages between $3 million and $5 million |
| Phase-out rate | 50% from 2025-26 (45% in 2024-25) |
| No threshold at all | Australian taxable wages above $5 million |
| Surcharges | Combined 1% above $10 million of national payroll, 2% above $100 million, on the Victorian share of wages over those thresholds |
The two surcharges are the mental health and wellbeing surcharge, from 1 January 2022, and the COVID-19 debt temporary payroll tax surcharge, which applies from 1 July 2023 until 30 June 2033.
How the phase-out works
Below $3 million of Australian wages you get the whole threshold, scaled down only if some wages are paid interstate or you didn't employ for the full year. If your Victorian wages are 30% of your Australian wages, you get 30% of the threshold.
Between $3 million and $5 million the threshold shrinks. The SRO's four steps are: scale the full threshold for the Victorian share and the part of the year you employed; scale $3 million the same way; take that from your Victorian wages and multiply by the phase-out rate; and subtract that from the first result. If the answer is negative, you get no threshold.
The SRO's own example for 2024-25: a metropolitan employer, employing all year, with $4.2 million of wages all in Victoria. The threshold was $900,000, less ($4.2 million minus $3 million) times 45%, which is $540,000, leaving a threshold of $360,000. The SRO points out a shortcut for a Victoria-only, full-year employer: the threshold is simply $5 million minus your wages, times the phase-out rate.
The SRO's second example shows the interstate and part-year adjustments together. An employer who employed for 335 of 365 days in 2024-25, with $1.5 million of Victorian wages and $2 million interstate, scaled the $900,000 threshold to $354,012 and the $3 million figure to $1,180,039. Then ($1.5 million less $1,180,039) times 45% is $143,982, leaving a threshold of $210,030. The SRO also has a threshold calculator on its site that does the same sum.
The regional rate and the 85% rule
To pay 1.2125%, at least 85% of your Victorian taxable wages must go to regional employees, people who do more than half of their work for you in regional Victoria. Only time worked in Victoria counts: in the SRO example, an employee spends 60% of a month interstate, 10% in Melbourne and 30% in regional Victoria. Of the 40% in Victoria, 75% was regional, so they count as a regional employee.
For monthly returns the 85% test is applied month by month, but for the annual reconciliation it's applied to the full financial year. You don't need to pass every month, but you do need to pass for the year to keep the lower rate.
If you hire in Perth as well, our Western Australia payroll tax guide explains how that state handles the threshold.
Registering, lodging and paying
- Register through PTX Express once your taxable Australian wages exceed the threshold. Have your ABN, contact details, 4 years of wage records and details of any group businesses ready. The SRO says confirmation usually comes within 90 business days.
- Lodge a monthly return in PTX Express, even for a month when you owe nothing, and pay by the 7th of the next month, or the next business day.
- Skip June: June wages are included in the annual reconciliation instead of a monthly return.
- Lodge and pay the annual reconciliation by 21 July each year, or the next business day. Extensions aren't available, and penalty tax of up to 25% plus interest may apply if you miss it.
- Correct mistakes with a replacement return for the month, or edit the annual reconciliation until early May of the following year.
Don't wait to be told. The SRO says that if you don't register when you should, you might have to pay penalties or interest, and it offers a wages worksheet and a threshold calculator to check whether you've crossed the line.
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If you also pay wages in New South Wales, our guide to payroll tax in NSW covers that state's rate and dates, and our general guide to payroll tax explains the idea across states. If you pay fringe benefits, the SRO asks for your fringe benefits tax return for the year when you lodge the annual reconciliation.
The verdict
If your Australian wages are heading past $1 million, register with the SRO before the first month you go over, and diarise the 7th of every month and 21 July. If you're between $3 million and $5 million, don't assume you get the full threshold, and if you're regional, check the 85% rule across the whole year, because that's the test that decides your rate at reconciliation.
Next door, a different threshold applies, and our South Australia payroll tax guide sets it out.
Frequently asked questions
What is the payroll tax rate in Victoria?
4.85%, or 1.2125% for regional Victorian employers, as of October 2026.
What is the Victorian payroll tax threshold?
$1 million a year, or $83,333 a month, from 1 July 2025. It phases out for Australian wages between $3 million and $5 million.
When is Victorian payroll tax due?
Monthly returns are paid by the 7th of the following month, and the annual reconciliation must be lodged and paid by 21 July.
Do I lodge a monthly payroll tax return for June?
No. June wages are included in the annual reconciliation.
Who qualifies for the regional payroll tax rate in Victoria?
Employers who pay at least 85% of their Victorian taxable wages to regional employees, tested over the full financial year for the annual reconciliation.
What are the Victorian payroll tax surcharges?
A combined 1% for national payrolls above $10 million and 2% above $100 million, applied to the Victorian share of wages over those thresholds.
