Victorian Payroll Tax Calculator 2026-27
Victorian Payroll Tax Calculator 2026-27
As your team grows, payroll tax is one of the first state taxes a Victorian business hits, and it catches many owners by surprise. This Victorian payroll tax calculator estimates your 2026-27 liability from your annual Victorian taxable wages, applying the $1 million tax-free threshold, the deduction phase-out between $3 million and $5 million, and the current State Revenue Office rate for metropolitan and regional employers.
Enter your annual Victorian wages below to see your estimated payroll tax. For the full detail on thresholds, grouping and registration, read our guide to payroll tax in Victoria. To make sure you are registered correctly and not paying more than you need to, book a tax planning review or speak with our team.
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How This Victorian Payroll Tax Calculator Works
Payroll tax in Victoria is a state tax on the wages you pay once your total Australian taxable wages exceed the tax-free threshold. From 1 July 2025, the annual threshold is $1 million, so businesses with Victorian wages at or below $1 million pay no payroll tax. Above the threshold, tax is charged on your wages less a deduction, at 4.85% for metropolitan employers and a reduced 1.2125% for eligible regional employers. Wages here include salaries, superannuation, most allowances, fringe benefits and certain contractor payments.
The full $1 million deduction applies while your wages are $3 million or less. Between $3 million and $5 million the deduction reduces by $1 for every $2 of wages above $3 million, so it phases out completely at $5 million. From $5 million upward, payroll tax applies to your entire Victorian wages with no deduction. These figures are current for the 2026-27 year and are drawn from the State Revenue Office of Victoria.
Worked Example
Take a metropolitan Melbourne business paying $2 million in annual Victorian wages. Because wages are under $3 million, the full $1 million tax-free deduction applies. That leaves $1 million of taxable wages, taxed at the metropolitan rate of 4.85%, giving an estimated payroll tax of $48,500 for the year. If the same business grew to $4 million in wages, the deduction would phase down to $500,000, leaving $3.5 million taxable and a payroll tax of $169,750, which shows how quickly the cost rises as you grow.
What to Do With Your Results
The single most important payroll tax trap for growing businesses is grouping. If your business is connected with other businesses through common ownership, shared employees or a controlling interest, the State Revenue Office can treat you as a group. In that case the group shares just one tax-free threshold, and every entity in the group is jointly liable. Owners who run several companies or trusts are often caught out because they assume each entity gets its own $1 million threshold. If you might be part of a group, enter your combined group wages, not just one entity, for a realistic estimate.
This calculator also excludes the mental health and wellbeing surcharge that applies to wages above $10 million, the apportionment of the threshold where you pay wages in more than one state, and specific exemptions. Payroll tax is self-assessed and lodged monthly with an annual reconciliation, and the penalties for getting registration or grouping wrong can be significant. For a business approaching or crossing the threshold, speak with a registered tax agent to get the structure and registrations right before the liability grows.
Crossing the payroll tax threshold is usually a sign the business has outgrown set and forget compliance. Forecasting when you will cross it, confirming how your entities group, and building the cost into your pricing before you hire again is core business advisory in Melbourne work, and it is exactly what a tax planning review is designed to cover. In our experience a proactive business accountant in Melbourne should be raising this with you a year before the threshold arrives, not explaining it after the first assessment lands.
Frequently Asked Questions
What is the payroll tax threshold in Victoria for 2026-27?
From 1 July 2025, the Victorian annual payroll tax threshold is $1 million, up from $900,000. If your total Australian taxable wages are at or below $1 million a year you pay no Victorian payroll tax. Above the threshold, tax applies to your wages less a deduction. The full $1 million deduction is available while wages are $3 million or less, then it phases out between $3 million and $5 million.
What is the Victorian payroll tax rate?
For 2026-27 the standard metropolitan payroll tax rate in Victoria is 4.85%. Eligible regional Victorian employers pay a reduced rate of 1.2125%. The rate is applied to your Victorian taxable wages after the tax-free deduction. Businesses with wages above $10 million also pay a mental health and wellbeing surcharge on top of the standard rate, which this calculator does not include.
What is grouping and why does it matter?
Grouping treats connected businesses as a single employer for payroll tax. Businesses can be grouped through common ownership, shared or interchanged employees, or a controlling interest. When entities are grouped they share one tax-free threshold rather than each claiming their own, and all members are jointly and severally liable for the group’s payroll tax. This commonly catches owners who operate through several companies or trusts, so if that is you, calculate on your combined group wages.
When do I have to register for payroll tax in Victoria?
You must register for payroll tax once your Australian wages exceed the threshold, which on a monthly basis is $83,333 from 1 July 2025. Registration and monthly returns are lodged through the State Revenue Office PTX Express system, followed by an annual reconciliation. If your wages are approaching the threshold it is worth registering and planning ahead, because penalties and interest can apply where a business should have been registered but was not.
Does superannuation count as wages for payroll tax?
Yes. For Victorian payroll tax, taxable wages include superannuation contributions, most allowances, bonuses, commissions, fringe benefits and certain contractor payments, as well as ordinary salaries and wages. This is why many businesses cross the threshold sooner than they expect. When you use this calculator, use your total taxable wages including super, not just base salaries, so your estimate reflects what the State Revenue Office actually assesses.
General Advice Disclaimer: This calculator provides general information only and does not constitute tax or financial advice. It applies the 2026-27 Victorian payroll tax threshold and rates and does not account for grouping, interstate wage apportionment, the mental health and wellbeing surcharge, exemptions or circumstances specific to you. Your actual payroll tax will depend on the full facts of your situation. Before acting, obtain advice from a registered tax adviser. Pinnacle Accounting & Advisory is a registered tax agent and CPA firm advising business owners across Melbourne and Australia.
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