Victorian payroll tax: thresholds, rates and SRO lodgement
For Melbourne, Geelong, Ballarat and regional Victorian employers — State Revenue Office of Victoria threshold ($900K), standard rate (4.85%), regional rate (1.2125%), mental health surcharge, and COVID-19 debt levy.
Victoria's payroll-tax framework is administered by the State Revenue Office (SRO) under the Payroll Tax Act 2007 (Vic). Victoria has the lowest threshold of the five main states ($900K annual) and one of the most complex rate structures — a standard 4.85% rate, a separate 1.2125% rate for regional Victorian employers (mostly outside metro Melbourne), a 0.5% mental health and wellbeing surcharge for employers above $10M in Victorian wages (1% above $100M), and a 0.5% COVID-19 debt levy on employers above $10M (1% above $100M) running through 30 June 2033. Large Victorian employers can effectively face a 6.85% combined payroll-tax cost.
Victoria payroll tax at a glance
| Field | Value |
|---|---|
| Authority | State Revenue Office of Victoria |
| Free threshold (annual) | $900,000 |
| Free threshold | $0 – $900,000 · 0% (free) |
| Standard Victorian rate | $900,000 and above · 4.85% |
| Deduction structure | Standard rate 4.85%. Regional Victorian employers (where 85%+ of payroll relates to regional employees) pay only 1.2125%. Mental health and wellbeing surcharge of 0.5% applies above $10M wages, increasing to 1% above $100M. The COVID-19 debt levy adds another 0.5%/1% on the same thresholds, running through 30 June 2033. |
Rates and thresholds verified against State Revenue Office of Victoria as at 2026-05-18. Re-verify each state budget cycle (typically May/June) before relying on these figures for a lodgement.
Standard rate vs regional rate — and the 85% test
Victoria offers a reduced 1.2125% payroll-tax rate for regional employers — about a 75% discount on the standard 4.85% rate. To qualify, 85% or more of the employer's Victorian wages must relate to employees whose principal place of employment is a regional Victorian location (defined by the SRO's regional postcode list). Metro Melbourne postcodes are excluded; regional centres like Geelong, Ballarat, Bendigo, and the Latrobe Valley qualify.
The 85% test is calculated annually on the annual reconciliation. An employer who falls just below 85% in a year pays the full 4.85% rate retroactively for the whole year — there is no partial discount. HelloBooks tags employees by principal-place postcode and tracks the running 85% calculation through the year so you don't get caught off-guard by a single late-year hire pushing the ratio below threshold.
Mental health and wellbeing surcharge + COVID-19 debt levy
Effective 1 January 2022, Victoria added a Mental Health and Wellbeing Surcharge for large employers: 0.5% on Victorian wages above $10M, increasing to 1% on wages above $100M. The surcharge funds Royal Commission-recommended mental health services. The threshold is per group (not per entity), so corporate groups with consolidated wages above $10M pay it even if no single entity is above.
The COVID-19 debt levy (Payroll Tax (Temporary) Surcharge) adds another 0.5% above $10M and 1% above $100M, running from 1 July 2023 to 30 June 2033. It's stacked on top of the standard rate AND the mental health surcharge — large Victorian employers can effectively pay 6.85% (4.85% + 0.5% + 0.5%) below $100M wages, and 7.85% (4.85% + 1% + 1%) above $100M. The two surcharges are reported as separate lines on the SRO return.
Monthly returns, annual reconciliation, and SRO Online
Victorian payroll-tax employers lodge monthly returns by the 7th of the following month via SRO Online Services. The May return is replaced by the annual reconciliation, due 21 July, covering the full prior financial year. Annual reconciliation trues up against actual Australia-wide group wages, applies the rate ladder (standard, regional, surcharges), and produces a refund or balancing amount. HelloBooks generates monthly returns from STP Phase 2 data and prepares the annual reconciliation in early July.
Questions Victoria employers ask
Other Australian state payroll-tax guides
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