Victoria State Budget 2025-26 – No new taxes, but spending cuts loom
Victoria State Budget 2025-26 – No new taxes, but spending cuts loom
Victorian Treasurer Jaclyn Symes has handed down the 2025-26 Victoria State Budget. This year’s budget officially contained no new tax measures beyond ordinary inflation. However, a new emergency services levy has sparked protests from firefighters and farmers, who argue it is unfair and unaffordable. The levy is intended to fund emergency services and disaster response, with the government stating that the funds raised will go toward supporting these services.
Instead of taxation, the focus was on several key spending measures, including a $11.1 billion investment into healthcare with $9.3 billion directed to hospitals, free public transport for children and the delay or scaling back of some major infrastructure projects, particularly in the areas of rail and road, in an attempt to tighten spending and deliver a budget surplus.
Emergency Services and Volunteer Fund Levy
A levy to support emergency services, the Emergency Services and Volunteers Fund (ESVF) has sparked significant debate, particularly among farmers, firefighters, and local councils. The levy replaces the Fire Services Property Levy and is expected to raise an additional $2.1 billion over a three year period for emergency services. However, the financial burden on farmers and rural communities is expected to be substantial, with levy increases of up to 150 per cent in some areas.
Commencing on 1 July 2025, local councils have been charged with the responsibility of administering and collecting the levy. It applies to all property owners in Victoria, with rates varying based on property type and value. Eligible Country Fire Authority (CFA) and SES (State Emergency Service) volunteers and farmers in drought-affected areas can apply for partial rebates, but only for one property per person.
BDO Comment
The absence of new, or increased, taxes offers some small respite for Victorian businesses and property holders - other than those about to be hit with the greatest increases due to the Emergency Services Levy. However, property owners are still struggling to meet previous budget measures that significantly expanded some taxes in 2025, and which were already scheduled to expand further from 1 January 2026. In particular, the Vacant Residential Land Tax (VRLT) on unimproved land, as well as the congestion levies, are both increasing and expanding. Reforms to stamp duty are still no more than a trickle, as entry into the new Commercial and Industrial Property Tax (CIPT) regime still involves one last hit of duty on the acquisition of the vast majority of commercial and industrial land.
For those who found themselves subject to the VRLT for the 2025 land tax year, it may also be the last chance to take action to ensure that they are not subject to the tax again in 2026. In the second consecutive year of liability, the rate doubles to two per cent of the capital improved value of the land. For context, that will mean $15,000 of VRLT for a median-priced Victorian home worth $750,000 if vacant for six months in 2025.
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