Payroll Tax Calculator VIC 2025-26

How Victorian payroll tax works in 2025-26

Victorian payroll tax is the state tax that State Revenue Office Victoria (SRO Victoria) charges on the wages an employer (or a group of related employers) pays for work performed in Victoria. Unlike PAYG withholding, payroll tax is paid by the employer out of the business — it is not deducted from the employee's pay packet. The 2025-26 Victorian payroll tax year runs 1 July 2025 – 30 June 2026, with monthly returns generally lodged through PTX Express and an annual reconciliation submitted at the end of the financial year.

Three design choices shape the Victorian bill:

1. A $1 million tax-free threshold, set at the per-group annual level rather than per entity.
2. Two flat rates — 4.85% standard and 4.95% for regional employers — rather than a stepped marginal table.
3. A phase-out that gradually withdraws the threshold for employers with total Australian wages between $3 million and $5 million.

This calculator estimates the standard 4.85% / 4.95% liability for a single employer or simple group. It does not model the COVID-19 debt levy that applies to very large employers, which sits on top of the standard calculation.

The $1 million threshold from 1 July 2025

From 1 July 2025 the annual Victorian payroll tax threshold is $1,000,000, with an equivalent monthly threshold of $83,333. SRO Victoria charges payroll tax only on the portion of taxable Victorian wages above the threshold, so an employer paying $1.2 million of taxable wages with no interstate operations is taxed on the $200,000 above the threshold rather than the full $1.2 million.

Two important notes on the threshold:

• It is a per-group annual figure. Where two or more entities are grouped under the SRO Victoria grouping rules — for example, common control or common employees — the $1 million threshold is shared once across the whole group, not granted to each entity separately. Designated group employer (DGE) rules determine which entity is allowed to claim the threshold on each monthly return.
• It is reduced by interstate apportionment and by the phase-out. Once your group operates in more than one Australian state, or once your total Australian wages climb above $3 million, the usable Victorian threshold is smaller than the headline $1 million figure.

Metro 4.85% vs regional 4.95% rate

The standard Victorian payroll tax rate for 2025-26 is 4.85% of taxable Victorian wages above the threshold. Eligible regional employers pay a different rate of 4.95% on the wages of regional Victorian employees.

To qualify as a regional employer for 2025-26, both of the following must hold:

• At least 85% of the employer's wages must be paid to employees who perform their services mainly in regional Victoria; and
• The employer must have a regional Victorian business address registered with SRO Victoria.

The regional concession has been progressively reset over recent budgets — earlier years saw a much lower 1.2125% concessional rate, which has since stepped up. The figures above use the SRO Victoria current-rates settings for 2025-26; if the Victorian Government revises the regional rate in a subsequent budget, confirm against the SRO Victoria current-rates page before lodging.

Interstate wages and threshold apportionment

Victorian payroll tax is calculated on Victorian wages, but the threshold is shared across Australia. Where an employer (or a group of related employers) pays wages in more than one Australian state or territory, SRO Victoria reduces the Victorian threshold in proportion to the VIC share of total Australian wages:

Threshold after apportionment = $1,000,000 × (VIC wages ÷ total Australian wages).

For example, an employer with $2,000,000 of Victorian wages and $4,000,000 of total Australian wages is given only half of the headline threshold ($500,000) before any phase-out is considered. Wages paid wholly outside Victoria are not subject to Victorian payroll tax in their own right — but they still feed into both the apportionment fraction and the $3m-$5m phase-out test.

The principle, set out across the harmonised payroll tax framework that NSW, VIC and QLD all participate in, is that an employer with truly multi-state operations should not get a $1 million threshold in every state at once. Each state apportions the threshold to its own slice of wages so that the all-states threshold totals approximately $1 million for a single group.

The phase-out for wages between $3m and $5m

For 2025-26, Victoria gradually withdraws the tax-free threshold for employers whose total Australian wages sit between $3 million and $5 million. The reduction is broadly $1 of threshold lost for every $2 of wages above $3 million:

• At $3,000,000 of total Australian wages, the apportioned threshold is unchanged.
• At $4,000,000, the apportioned threshold is reduced by $500,000.
• At $5,000,000 and above, the apportioned threshold is fully phased out.

The phase-out interacts with interstate apportionment, and the order matters. SRO Victoria first apportions the $1 million by VIC share, then applies the phase-out reduction to the apportioned figure. The result is that a multi-state employer near the top of the phase-out range may have effectively no usable threshold left in Victoria, even though the headline figure is $1 million.

Mental health surcharge: NSW yes, VIC no, QLD yes

Several harmonised states layer an additional mental health or wellbeing surcharge on top of standard payroll tax for very large employers. Victoria has chosen a different funding mechanism, which sits outside this calculator's scope.

State	Standard rate	Mental health / wellbeing surcharge
NSW	5.45%	0.5% mental health levy on wages of large employers (above set threshold).
VIC	4.85% (metro) / 4.95% (regional)	No separate mental health surcharge. COVID-19 debt levy applies to the largest employers from 1 July 2023.
QLD	4.75% / 4.95%	Mental health levy on Australian wages above $10 million.

If you sit above the Victorian COVID-19 debt levy thresholds, your bill includes that additional rate on top of the standard 4.85% / 4.95% figure produced by this calculator. Confirm your additional liability directly with SRO Victoria.

Worked examples

1. Sub-threshold metro employer. A Melbourne-based business pays $800,000 of Victorian wages with no interstate operations. The threshold ($1,000,000) is unreduced. Taxable wages are $0 and the typical bill is around $0. The employer must still register with SRO Victoria once monthly wages cross $83,333, but no payroll tax is payable while annual wages stay below $1 million.

2. Multi-state employer in the phase-out range. A national group pays $2,000,000 of Victorian wages and $4,000,000 of total Australian wages. Apportioned threshold = $1,000,000 × (2/4) = $500,000. Phase-out reduction = ($4m − $3m) × 0.5 = $500,000. Reduced threshold = $0. Taxable VIC wages = $2,000,000 → tax = $2,000,000 × 4.85% = approximately $97,000 for the year, or about $8,083 a month.

3. Regional employer. A regional Victorian employer (≥ 85% regional employee wages and a regional VIC address) pays $1,500,000 of Victorian wages with no interstate operations. Threshold = $1,000,000, taxable = $500,000, rate = 4.95%. The typical bill is around $24,750 for the year, or about $2,063 a month. The same wage profile under the metro 4.85% rate would have produced approximately $24,250 — a difference of around $500 a year.

Lodgement and due dates

Most Victorian employers lodge and pay through PTX Express, the SRO Victoria online portal:

• Monthly returns: generally due by the 7th of the following month (with an extra day where the 7th falls on a weekend or public holiday). Each monthly return self-assesses payroll tax on wages paid in the previous month against one-twelfth of the apportioned threshold.
• Annual reconciliation: due by 21 July, covering the financial year just ended. The annual reconciliation re-runs the calculation at year-end with the actual full-year apportionment and phase-out, and either refunds an over-payment or collects the shortfall.
• Smaller employers under set monthly-wage thresholds may be eligible for an annual return rather than monthly returns. Eligibility is confirmed on registration with SRO Victoria.

The figure produced by this calculator is an annualised estimate assuming wages are spread evenly across the year. Actual monthly instalments and end-of-year reconciliation depend on the wage pattern, group structure and any rebates applied.

Common pitfalls

• Forgetting that the threshold is shared across Australia. A national employer who plugs only Victorian wages into the threshold (without entering total Australian wages) will overstate the tax-free amount and understate the bill.
• Mistaking the regional rate as a discount. 4.95% is currently higher than the 4.85% metro rate — the regional concession in 2025-26 takes a different form than the very low rate that applied in earlier years. Always check the SRO Victoria current-rates page before assuming a regional discount.
• Missing the $3m phase-out trigger. The phase-out is calculated on total Australian wages, not Victorian wages alone. A group with $1.5m of VIC wages and $3.5m of Australian wages is in the phase-out range even though VIC wages are below $3m.
• Ignoring grouping rules. Two entities under common control share a single $1 million threshold, not two. Aggregating wages incorrectly across a group can produce a bill that is materially wrong in either direction.
• Confusing PAYG and payroll tax. PAYG withholding is deducted from the employee's pay and remitted to the ATO. Payroll tax is an employer-paid state tax assessed on the gross wage bill — they are independent obligations.

VIC vs NSW vs QLD payroll tax

For employers weighing which state to expand into, three numbers usually decide the order:

• Threshold height — VIC and NSW now both sit at $1.0 million. QLD is more generous at $1.3 million.
• Top rate — NSW 5.45% (with a 0.5% mental health levy on the largest employers), VIC 4.85% / 4.95%, QLD 4.75% / 4.95%.
• Phase-out and surcharges — NSW, VIC and QLD each apply different mechanics for withdrawing the threshold or layering surcharges above set wage levels.

Compare the all-in annual bill at the actual wage profile rather than the headline rate. A NSW companion calculator is on our roadmap.

When to talk to a professional

This calculator gives a general estimate based on the SRO Victoria's published 2025-26 threshold and rates. Binding assessments — especially involving complex group structures, contractor inclusion tests, employment agency provisions, the COVID-19 debt levy, partial-year operations, or an exemption — should go through a Victorian-registered tax agent or payroll specialist. For your exact assessment, contact SRO Victoria or use PTX Express. Nothing on this page is personal tax, legal or financial advice.

Related calculators

• VIC Land Tax Calculator — Victorian general and trust thresholds with the 4% foreign surcharge.
• VIC Stamp Duty Calculator — Victorian transfer duty for owner-occupiers and investors.
• Salary Sacrifice Super Calculator — model the effect of pre-tax super contributions on take-home pay.
• HECS-HELP Repayment Calculator — annual HECS-HELP repayment by income.

Sources:

• SRO Victoria — Changes to the payroll tax threshold
• SRO Victoria — Payroll tax threshold calculator
• SRO Victoria — Payroll tax current rates
• SRO Victoria — Payroll tax overview
• Payroll Tax Australia — Resources
• business.gov.au — Payroll tax