Victoria Payroll Tax Calculator 2026–27

Payroll tax Victoria: how much you pay at different payroll sizes

Victorian payroll tax is 4.85% of taxable wages above the $1,000,000 threshold, but the threshold itself shrinks once Australian wages pass $3 million, which is why the effective rate rises faster in the $3 million to $5 million range than anywhere else in the scale. The table shows full-year amounts for a single employer paying all its wages in Victoria, at the metropolitan and regional rates.

Worked example: an employer in the $3m–$5m phase-out band

A Melbourne business pays $4,000,000 in wages, all in Victoria. Its deduction falls by 50 cents for every dollar over $3 million, so it can claim $500,000 instead of the full $1,000,000. Tax is 4.85% × ($4,000,000 − $500,000) = $169,750, an effective rate of 4.24%.

Each extra dollar of wages in this band costs 7.28% in payroll tax (the 4.85% rate plus the lost deduction), so a business planning to grow its headcount past $3 million should budget for that higher marginal cost. Above $5 million the deduction is gone and the marginal rate drops back to 4.85% until the surcharges start.

Regional employer rate: the 85% test explained

Regional employers pay a much lower rate. On $2,000,000 of wages, a qualifying regional employer pays $12,125 instead of $48,500, a saving of $36,375 (the regional rate is 1.21%). To qualify, at least 85% of your Victorian taxable wages must be paid to regional employees.

Under SRO Victoria’s rules, regional Victoria means 47 local government areas, from Alpine Shire to Yarriambiack Shire, plus six alpine resorts: Mt Baw Baw, Mt Buller, Mt Hotham, Mt Stirling, Falls Creek and Lake Mountain. An employee counts as regional if they perform more than half of their work for you in regional Victoria; only work done in Victoria counts in that test. You apply the 85% test month by month in your returns, but what counts is the full year. If you miss it in some months but meet it over the year, the annual reconciliation refunds the difference.

In a group, each business is tested on its own. A regional subsidiary that meets the 85% test pays the regional rate even if its Melbourne-based parent pays the standard rate.

At $12,000,000 of wages, a regional employer pays $165,500 compared with $602,000 for a metropolitan one. Both pay the same surcharge on wages over $10 million, so the surcharge is a much bigger share of the regional employer’s bill.

Registering and lodging through PTX Express

SRO Victoria handles payroll tax through its online portal, PTX Express. You register there once your total Australian wages, or your group’s, exceed the Victorian threshold, and you use the same portal for monthly returns and the annual reconciliation. Be ready to supply Australia-wide wages, not just Victorian wages, because they set both the threshold and the phase-out. For a group, the thresholds apply to the group’s combined wages rather than to each business.

The annual reconciliation is where the year is settled on actual figures: the deduction is recalculated on the year’s real Australian wages (which matters most inside the $3 million to $5 million phase-out band), and regional status is tested on the full year.

Exempt wages in Victoria

According to SRO Victoria, the main exempt wages are:

• Primary and secondary caregiver leave payments, up to a maximum of 14 weeks.
• Pay for employees absent as volunteer firefighters or emergency responders (CFA, SES, St John Ambulance, Red Cross, Australian Volunteer Coast Guard, Life Saving Victoria), but not if they are on annual or long service leave.
• Defence Force leave, community development employment project wages, and the income-tax-free part of genuine redundancy and early retirement payments.
• The first 10 days of a WorkCover claim paid by the employer, and transport accident (TAC) compensation paid through the employer.
• Wages of a re-employed apprentice who continues approved training with a new employer.
• Portable long service leave and redundancy scheme contributions, and reimbursements of actual business expenses.
• Motor vehicle allowances up to the ATO cents-per-kilometre rate and accommodation allowances up to the nightly limit; anything above is taxable, and SRO Victoria notes that most other allowances are taxable.

Contractors and the relevant contract rules

Most contracts for services fall within Victoria’s relevant contract provisions, so contractor payments are taxable unless an exclusion applies. The common exclusions are a contractor working for you for 90 days or less in a financial year (days do not have to be consecutive), services you need for less than 180 days a year, contractors who ordinarily provide the services to the public, contractors who engage others to do the work, and contracts mainly for materials or equipment rather than labour (where materials or equipment exceed 50% of the contract cost). Owner-drivers carrying goods, insurance agents and door-to-door sellers of domestic goods are excluded outright. SRO Victoria’s revenue rulings explain how each test is applied, including PTA-021 (services to the public), PTA-023 (engaging others) and PTA-033 (materials and equipment), while PTA-018 covers contractor deductions.