In brief
The 2026-27 Victorian Budget (the Budget) was delivered on 5 May 2026 by Treasurer Jaclyn Symes. The Budget is designed to support the State’s priorities by emphasising cost-of-living support, frontline services, and by pursuing fiscal consolidation. The Budget includes a $2.5bn package of cost-of-living and affordability measures, an extension of the off-the-plan duty concession and a targeted payroll tax exemption for lower-fee non-government schools.
Total revenue from transactions for the general government sector is forecast at $115.6bn in 2026-27 and total expenses are forecast at $114.5bn, delivering an operating surplus of $1.0bn (following a $0.7bn operating surplus in 2025-26). The operating surplus is forecast to reach an average surplus of $1.9bn across the three years of forward estimates to 2029-30. Taxation revenue in 2026-27 is forecast at $43.2bn. Net debt is projected to reach $175.6bn in June 2027 (24.9% of Gross State Product (GSP)).
In detail
Fiscal position
Operating surpluses from transactions for the general government sector are projected to rise from $0.7bn in 2025-26 to $2.0bn by 2029-30. Net debt is projected to rise from $175.6bn (24.9% of GSP) in 2026-27 to $199.3bn (24.4% of GSP) in 2029-30. For 2026-27, real GSP growth is forecast at 1.50% and Consumer Price Index is forecast at 3.50%.
Payroll tax
Payroll tax rates remain unchanged for metropolitan businesses at 4.85% and regional businesses at 1.2125%. The COVID Debt Levy continues to apply, with businesses with national payrolls over $10m paying 0.5%, and those over $100m paying an additional 0.5%. As a part of the Budget, effective from 1 July 2026, a new payroll taxes exemption applies for non-government schools with an income per student of up to $16,397.
Land tax
Land tax revenue is forecast to reach $6.5bn in 2026-27. The COVID Debt Levy, which temporarily adjusts land tax rates and thresholds, is set to last until 30 June 2033 and is expected to generate $1.2bn in 2026-27. Residential land values are expected to rise in 2026-27, reflecting increased dwelling prices, while commercial land values are set for modest growth following a period of decline.
Stamp duty (land transfer duty)
Revenue from land transfer duty is forecast to be $10bn in 2026-27 but is expected to decline due to decreased property market activity amid higher interest rates.
The temporary off-the-plan concession for apartments, townhouses and units has been extended by six months, now applying to contracts signed between 21 October 2024 and 21 April 2027. The Budget also indicates that more than 12,000 properties have entered the Commercial and Industrial Property Tax reform scheme which commenced in July 2024. Under this reform, qualifying commercial and industrial properties may enter the scheme when direct or indirect interests in the property are transferred, and duty is paid. Once the property has entered the regime, duty does not arise on any further transfers of the property, however, following a 10-year transition period, an annual land-based tax will be levied on the property. Businesses with commercial and industrial properties that have entered this system are projected to pay $714m less in duty over four financial years.
Other state tax measures
Insurance duties for certain businesses are being progressively abolished from 1 July 2024, reducing to 7% from 1 July 2026, and by 1% annually until full removal in 2033. From 1 July 2027, green passenger vehicles above the luxury car threshold will no longer be charged a lower rate of motor vehicle duty than other standard passenger vehicles.
The Emergency Services and Volunteers Fund (replacing the Fire Services Property Levy from 1 July 2025) is expected to collect $1.6bn in 2026-27. In 2026-27, revenue forecasts for gambling taxes is $2.9b, short stay levy is $87m and windfall gains tax is $97m.
Expenditure
The Budget provides a $2.5bn package of cost-of-living and affordability measures, alongside continued investment in frontline services and the State's capital projects pipeline. Key allocations include:
Cost of living: $759m for 20% rebates on the cost of up to two light vehicle registrations per person paid for in 2025-26; $433m for free public transport in April-May 2026 and half-price fares until 1 January 2027; $120m in support for families with children.
Housing: $860m over five years to the Social Housing Growth Fund to support more than 7,000 additional social homes over the next decade; $37m to better use Victorian land (including planning reform and the Development Facilitation Program); Suburban Rail Loop tunnelling to commence in 2026 with stage one expected to support around 70,000 new homes over 30 years.
Health, education and transport: $75m for the Regional Health Infrastructure Fund; $1bn provided for new schools and upgrades to existing schools; over $1bn in additional infrastructure investment to support the States transport network.
Infrastructure, housing and business
Government infrastructure investment was $21.4bn in 2025-26, reducing to $15.3bn by 2029-30. The budget papers note the right to work from home is being legislated, intended to support workforce participation.
The takeaway
The 2026-27 Victorian Budget is primarily a cost-of-living and frontline services Budget, delivered against a backdrop of renewed inflation, higher interest rates and global energy price pressures. No significant new revenue-raising measures have been announced, and the three revenue initiatives together deliver only a small net impact. Taxpayers liable for payroll tax, including the COVID Debt Levy, should expect those settings to continue largely unchanged. Developers and purchasers of off-the-plan stock should note the revised eligibility window, and purchasers of luxury green vehicles should note the 1 July 2027 commencement date for the withdrawal of the concessional duty rate.
Contact us
For further information on how these measures may affect you or your business, please contact your PwC adviser or one of the contacts listed below.
Barry Diamond
Partner, State Taxes, PwC Australia
Emma Hassaram
Director, Tax, PwC Australia
Ilyas Elahi
Director, Tax, PwC Australia
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