Payroll Tax Threshold Changes from 1 July 2025: What Victorian Employers Need to Know

As the new financial year approaches, business owners across Victoria need to be aware of important changes to payroll tax obligations. Whether you're new to payroll tax or have managed it for years, understanding the reconciliation process and new thresholds is essential for staying compliant and managing cash flow.

At Vivid Enterprise Solutions, we support Melbourne businesses by making complex tax obligations easier to navigate. Below is a summary of what’s changed, what’s required, and how you can prepare.

Understanding Payroll Tax in Victoria

Payroll tax is a state-based tax applied to businesses when their total wages exceed a set threshold. Taxable wages include salaries, superannuation, allowances, commissions, bonuses and, in some cases, contractor payments. In Victoria, payroll tax is administered by the State Revenue Office (SRO), and the thresholds and rates can change from year to year.

If your business pays wages that exceed the tax-free threshold, you're required to register, lodge periodic returns, and complete an annual reconciliation.

Annual Payroll Tax Reconciliation: Key Dates for 2024–25

The payroll tax annual reconciliation for the 2023–24 financial year has now closed. For the 2024–25 financial year, the SRO will open the online reconciliation portal, PTX Express, from 19 June 2025.

All registered businesses must complete and lodge their annual reconciliation by 21 July 2025.

The reconciliation process typically takes around 30 minutes. Before 27 June 2025, it is important to update your details in PTX Express if your business has:

• Changed employer type during the year

• Ceased employing staff

• Changed contact details

  
  

If you are a newly registered employer on an annual cycle and registered within the past 12 months, you will not be able to access PTX Express until 19 June 2025.

In this case, you should contact the SRO directly to notify them of any changes.

What’s Changing from 1 July 2025?

From 1 July 2025, which begins the 2025–26 financial year, the tax-free thresholds will increase again:

Period	Annual Threshold	Monthly Threshold
From 1 July 2024	$900,000	$75,000
From 1 July 2025	$1,000,000	$83,333

This change will reduce the payroll tax burden for many small to medium-sized businesses. However, there are important considerations for employers with larger wage bills.

Additional Rules for Higher-Wage Employers

Starting 1 July 2025, a phasing-out arrangement will apply to the payroll tax-free threshold for larger employers:

• If your total Australian wages exceed $3 million, your available threshold will be gradually reduced.

• If your wages exceed $5 million, you will no longer receive any payroll tax-free threshold.

  
  

These adjustments ensure that tax relief is targeted at smaller employers, while larger businesses continue contributing at full rates.

Tip: The State Revenue Office offers a calculator to help estimate your payroll tax liability under the new structure.

Why These Changes Matter

The increase in the payroll tax-free threshold presents an opportunity for many businesses to reduce their tax obligations—or potentially move below the threshold altogether. For others, especially those nearing or exceeding $3 million in wages, planning will be essential.

If you’re unsure how these payroll tax changes apply to your business or need support lodging your reconciliation, reach out to the team at Vivid Enterprise Solutions.

Let us take the stress out of payroll tax so you can focus on what matters most growing your business.

Disclaimer: This article is intended to provide general guidance and is not specific advice.

We encourage you to seek tailored advice for your circumstances.