An election year State Budget shaped by caution, not reform

On 5 May 2026, the Victorian Treasurer, Jaclyn Symes, handed down the 2026-27 State Budget.

The State Budget contains no meaningful tax reform, such as the proposal from industry groups to reduce or eliminate the absentee owner surcharge to encourage global investors into the state. Victorian landowners will continue to pay significant property taxes, including stamp duty, land tax, vacant residential land tax, foreign purchaser additional duty, absentee owner surcharge, windfall gains tax (WGT) and the Growth Areas Infrastructure Contribution.

Taxation revenue is forecast to be $43.2 billion in 2026-27, and, based on forward estimates, will exceed $50 billion by 2029-30.

In 2026-27, taxation revenue is forecast to include:

• $12.5 billion from taxes on employers’ payroll and labour force, inclusive of payroll tax, the COVID Debt Levy on payroll, and the Mental Health and Wellbeing Levy;
• $7.7 billion from land tax, the absentee owner surcharge, vacant residential land tax and the COVID debt levy on landholdings;
• $10 billion from stamp duty;
• $2.9 billion from gambling taxes; and
• $3.9 billion from motor vehicle taxes, including registration fees and duty on registrations and transfers.

Taxation measures

The taxation measures announced in the State Budget are as follows:

• the extension of the temporary off-the-plan stamp duty concession for a further six months;
• the cessation of motor vehicle duty concession for luxury green passenger cars; and
• the indexing the payroll tax income per student threshold for lower-fee non-government schools.

Extending the temporary off‑the‑plan stamp duty concession for a further six months

In last year’s 2025-26 State Budget, the Treasurer announced that the temporary stamp duty concession for off-the-plan apartments, townhouses and units, which was due to expire in October 2025, would be extended for a further 12 months. The concession then applied to contracts signed on or after 21 October 2024, and before 21 October 2026.

This temporary off-the-plan concession was introduced for purchasers of dwellings (including apartments and townhouses) within strata subdivisions that had common property. The concession was also extended to investors, companies and trusts, with no requirement to be eligible for either the principal place of residence exemption or the first home buyer duty exemption or concession.

This concession will now be extended for a further six months, and will apply to contracts signed on or after 21 October 2024, and before 21 April 2027.

While this extension provides some assistance to purchasers, ideally, it would have been extended for a longer period, given the housing crisis in Victoria and cost-of-living pressures. Industry bodies had also requested that the Government widen this concession to apply to completed and unsold apartments and townhouses, which has not been incorporated into this measure; this concession therefore continues to apply only to apartments, units or townhouses sold off-the-plan.

Cessation of motor vehicle duty concession for luxury green passenger cars

From 1 July 2027, green passenger vehicles above the luxury car threshold (being $80,567) will no longer be charged a lower rate of motor vehicle duty than other standard passenger vehicles.

The Government notes that the proportion of sales in Victoria of new light vehicles that are battery electric, plug-in hybrid electric or hybrid electric vehicles has grown from 11 percent in the first quarter of 2022 to 35 percent in the fourth quarter of 2025.

This measure will only affect a small proportion of green vehicle sales, with less than 10 percent of green passenger vehicles sold in 2024-25 above the luxury threshold of $80,567.

This change is intended to ensure that luxury green vehicles are charged the same rate of duty as standard luxury vehicles; as green vehicles pay less or no fuel excise, this measure is intended to ensure that all vehicle purchasers contribute to infrastructure and services.

Indexing the payroll tax income per student threshold for lower-fee non-government schools

The Government has brought forward a review of the income per student threshold for the non-government schools payroll tax exemption, and will align the threshold with the Schooling Resource Standard (SRS) going forward.

From 1 July 2026, non-government schools with an income per student up to $16,397 will be exempt from payroll tax. The income per student threshold will increase each year in line with the SRS amount for secondary students, determined and published by the Commonwealth Government.

Eligibility for the payroll tax exemption for non-government schools will continue to be assessed against the latest available income per student data and the revised threshold.

No reform to WGT in State Budget

In the State Budget, the Government has also disregarded industry submissions to abolish the WGT, which is payable when a Government rezoning of land results in an increase in the value of that land that is above $100,000. The calculation of this increase in the value of the land (being the ‘taxable value uplift’) is the difference in the capital improved value of the land before and after the rezoning takes effect.

Further information regarding the WGT is available here. Several upcoming rezonings are anticipated to result in an uplift in land and trigger WGT, the most imminent being land in the Monash Suburban Rail Loop (SRL) precinct. If you are an impacted landowner in this precinct and are issued with a WGT Assessment, we can represent you in objecting to the SRO. We have successfully represented numerous landowners in WGT objections, in which we have achieved reductions in the taxable value uplift of land, significantly reducing the WGT payable or eliminating the WGT due to the application of legislative exemptions.

Contact us

If you would like to discuss any state tax issues, including any of the measures announced in the Victorian Budget, please contact Tamara Cardan, Special Counsel, on +61 3 9321 7862.

We have represented many clients in state taxation matters, including objections and disputes regarding land tax, absentee owner surcharge, stamp duty (including landholder duty), WGT, and payroll tax. We can represent you in any initial investigations conducted by the State Revenue Office. If you are currently being investigated, we recommend that you reach out to us to seek advice and representation.

_{References
Victorian Budget 2026/27 Budget Paper No.2 – Strategy and Outlook
Victorian Budget 2026/27 Budget Paper No.3 – Service Delivery}