Victorian businesses and property owners face a range of tax and levy changes from 1 July 2025. From payroll tax adjustments to the introduction of a new emergency services fund, here’s a summary of the key updates.

Emergency services and volunteers fund replaces fire services levy

The Fire Services Property Levy has now been replaced by the Emergency Services and Volunteers Fund (ESVF). The new model, collected through local council rates, broadens its reach to support a wider range of emergency services including the Victoria State Emergency Service, Emergency Management Victoria and Forest Fire Management Victoria.

A key feature of the change is the introduction of a rebate for eligible volunteers from the Country Fire Authority, Victoria State Emergency Service, and Shepparton Search and Rescue. This concession applies to one eligible home or farming property per volunteer.

Vacant land will also be more accurately categorised from 1 July 2026 onwards, aligning it with the correct property sector for levy purposes.

Payroll tax thresholds lifted

To ease the burden on smaller employers, the annual payroll tax-free threshold has increased from $900,000 to $1 million. On a monthly basis, this translates to a rise from $75,000 to $83,333.

For medium-sized employers, the phase-out rate for payroll tax deductions has also changed. Businesses with Australia-wide wages between $3 million and $5 million will now see their deductions phased out at 50%, up from the previous 45%. Businesses with wages above $5 million remain ineligible for any deduction.

Large employers continue to be subject to the mental health and COVID-19 payroll tax surcharge, which applies to wages paid in Victoria once national payroll exceeds $10 million.

Regional employers

The payroll tax rate for regional employers remains at 1.2125%.

To obtain the lower rate, you must pay at least 85% of your Victorian taxable wages to regional employees. These employees must perform more than half of their work for you in regional Victoria. If your employees work in other parts of Australia, only the work they do in Victoria counts when deciding if they are regional employees.

For example, if during a month, an employee works 60% of the time in Australian Capital Territory, New South Wales and Queensland, 10% in Melbourne and 30% in regional Victoria, only the time spent in Victoria (being 40%) is relevant.

Out of that 40%, the employee spent 75% of time in regional Victoria (30% out of 40%) and is considered a regional employee.

Regional Victoria means these regional councils.

Business insurance duty continues to fall

In line with the state government’s plan to phase out insurance duty on certain business products, the duty rate has been reduced to 8% this year. The aim is to fully remove this duty over the next decade, creating a more supportive environment for business risk management.

Other changes to be aware of

Tax default interest rate

The interest rate for tax defaults has been lowered from 12.36% to 11.78%, reflecting a revised market rate plus margin.

Penalty tax for reckless defaults

New laws introduce a 50% penalty tax for reckless defaults under the Taxation Administration Act. The Land Tax Act has also been amended to extend principal place of residence exemptions in cases of disaster and clarify trustee notification obligations.

Off-the-plan duty concession extended

A temporary land transfer duty concession for off-the-plan apartments and townhouses has been extended to 20 October 2026. This measure is aimed at encouraging more residential development and home ownership.

Payroll tax exemption for medical clinics

An exemption from payroll tax for wages paid or payable to contractor general practitioners and employee general practitioners in relation to fully-funded (which includes bulk-billed) consultations takes effect from 1 July 2025.

Drive-away vehicle sales

New valuation guidelines clarify how duty should be applied when vehicles are sold with “drive-away” pricing, ensuring that all inclusive on-road costs are factored into the dutiable value.

Growth Areas Infrastructure Contribution index

Rates now stand at $118,830 per hectare for Type A land, and $141,150 per hectare for Types B-1, B-2 and C. The threshold for excluded building works has been increased to $1,485,650, and the interest rate applied to deferred payments has decreased slightly to 5.0871%.

Metropolitan Planning Levy

For developers in metropolitan Melbourne, the threshold for the Metropolitan Planning Levy has also risen, moving from $1,271,000 to $1,311,000. This affects the calculation of planning-related levies on larger developments.

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Employers should reassess payroll tax obligations under the new thresholds and phase-out rules, while developers and property investors will need to factor updated GAIC and MPL rates into project budgets. The ESVF changes will be reflected on council rates notices, and eligible volunteers should consider whether they can apply for a rebate.

For all affected parties, it’s important to check the latest guidance on the State Revenue Office (SRO) website or seek tailored advice to ensure compliance, and to take advantage of any available concessions.