The 2026-27 Victorian State Budget has been handed down by Treasurer Jaclyn Symes, setting out the State’s fiscal strategy, revenue outlook and funding priorities for the year ahead. The Budget reflects a carefully constrained fiscal environment, with taxation policy focused on stability rather than broad‑based reform.

Against ongoing cost‑of‑living pressures and elevated debt levels, the Government has largely maintained existing state tax settings. This approach reinforces the importance of payroll tax, land tax and duties as core revenue sources while making limited, targeted adjustments within the framework of existing exemptions and concessions.

Payroll tax - Targeted relief for non‑government schools

A small but notable payroll tax measure was announced in this year’s Budget relating to the payroll tax exemption available to certain non‑government schools. The Government has brought forward the scheduled review of the income per student threshold used to determine eligibility for the exemption.

Previously, the threshold of $15,000 per student was legislated to remain in place until at least 1 January 2029. Under the 2026-27 Budget, the threshold will instead increase from 1 July 2026 to $16,397 per student, aligning the exemption threshold with the Schooling Resource Standard.

This change means that non‑government schools with income per student between $15,000 and $16,397 will become eligible for payroll tax exemption from 1 July 2026.

What is the impact?

The measure provides targeted payroll tax relief to a subset of non‑government schools that previously sat just above the exemption threshold. For those schools, the change may lead to payroll tax exempt status from the 2026-27 financial year.

While the measure is narrow in scope, it reflects the Government’s broader preference for targeted adjustments to existing tax settings rather than systemic payroll tax reform.

BDO comment

Aligning the payroll tax exemption threshold with the Schooling Resource Standard improves consistency and fairness within the existing framework. Eligible schools should review their income per student calculations to confirm entitlement from 1 July 2026 and ensure payroll tax registrations and reporting are updated accordingly.

Land tax - Continued reliance on existing settings

The 2026-27 Victorian State Budget does not introduce headline changes to land tax rates or thresholds. Instead, land tax continues to play a central role in the State’s revenue base, supporting expenditure commitments in a fiscally constrained environment.

The Statement of Finances highlights land‑based taxes as a stable and significant source of revenue, reinforcing their ongoing importance to Victoria’s fiscal position.

BDO comment

While no immediate land tax changes have been announced, property owners should not discount future policy activity in this area and the property industry, and many property owners will be disappointed not to see any relief. Monitoring valuations and land tax assessments for accuracy and reviewing eligibility for exemptions or concessions as circumstances change, remains critical.

Stamp duty - Stability over reform

No broad changes to stamp duty have been announced as part of the 2026-27 Budget. Duties continue to operate within existing frameworks, contributing materially to State revenues and reinforcing the Government’s cautious approach to tax policy, favouring revenue certainty over structural change. For businesses and investors, existing duty imposts remain a key consideration in transaction planning.

BDO comment

Although reform has not been progressed in this Budget, stamp duty remains an area of ongoing policy discussion in Victoria, and a significant revenue source highly vulnerable to an economic downturn. Transaction structures, concessions and timing should continue to be carefully managed to fully assess duty exposure as compliance activity increases in scale and sophistication.

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