Victorian State Budget 2026-2027
On 5 May 2026, the Victorian State Government announced the Victorian State Budget for 2026-2027. While no new taxes were brought in, there were some changes including increased taxes on motor vehicles.
The main changes (subject to legislation) include:
an extension of the off-the-plan stamp duty concession to 21 April 2027;
higher rates of motor vehicle duty for “luxury green passenger vehicles”; and
introducing indexing to the threshold for payroll tax on non-governmental schools
Expansion of off-the-plan land stamp duty concession to 21 April 2027
Up until 2017, the off-the-plan concession allowed for reduction in the duty payable for properties bought during construction. From 2017, the Government restricted this to first home buyers (up to $750,000) and buyers of principal places of residence (up to $550,000).
On 21 October 2024, the Victorian Government announced an initially one year (i.e. to 21 October 2025) concession that the off-the-plan concession would once again be open to all purchasers of strata-titled properties (ie units and apartments) with no requirement that the property be used as a principal place of residence.
Under last year’s State Budget, this expanded off-the-plan concession was extended to 21 October 2026.
Given the State Election is 28 November 2026, it is not surprising that this concession has been extended by the State Government to 21 April 2027.
Luxury Green Passenger Cars
Motor vehicle duty will increase for “luxury green passenger cars”.
From 1 July 2027, “green passenger vehicles” above the “luxury car threshold” (currently $91,387 but indexed) will lose the current 4.2% motor vehicle duty on transfer of registration and revert to the higher rates applying to all other vehicles.
These are 5.2% for vehicles above the luxury car threshold up to $100,000 in value, 7% duty for vehicles up to $150,000 in value or 9% for cars with values above $150,000.
Indexing introduced for payroll tax surcharges on non-government schools
The threshold for the imposition of the State Government’s contentious payroll tax on wages paid by non-government schools (introduced from 1 July 2024) will be set at $16,397 for income per student from 1 July 2026 and be indexed annually according to the “Schooling Resource Standard”. This will have some impact for cheaper non-government schools but is expected to result in only $1.6 million less payroll tax in the 2026-27 financial year (rising thereafter).
Key takeaways
The key headlines for this budget are likely to be on the cash deficits and size of the State debt.
However, as State expenditure is ultimately paid by State taxation – there is likely to be movement in this area over the next year as the State moves towards the next State Election.
The next government (of whichever party) will have to find the funds to pay for the interest bill on the existing debt and any expenditure promised as part of the election campaign.
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Please contact us with any questions on the Victorian State Budget 2026-2027 or any other State Tax issues.
Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au
Nicholas Clifton
Principal Lawyer
T +61 3 9611 0154 | M +61 401 150 955
E nclifton@sladen.com.au
