On Tuesday, 5 May 2026, the Victorian Treasurer, Jaclyn Symes MP, handed down the 2026-27 State Budget. The Budget forecasts a $1 billion operating surplus for 2026-27, following a revised operating surplus of $727 million for 2025-26. This marks the second consecutive operating surplus since the pandemic.

Economic outlook

Key economic forecasts for 2026-27 include:

• Employment growth of 1.25%
• Average unemployment rate of 4.75%
• Inflation at 3.5%
• Wage increase by 3.25%
• Net debt of $175.6 billion and interest payments of $8.9 billion for the year
• Revenue of $115.6 billion and expenses of $114.5 billion

Revenue and tax measures

The tax revenue forecast of $43.2 billion comprises mostly of taxes on employers’ payroll and labour force of $12.5 billion, land transfer duty of $10 billion and land taxes of $7.7 billion. There are also motor vehicle taxes of $3.9 billion, gambling taxes of $2.9 billion and insurance taxes of $2.3 billion.

The Budget contains the following revenue initiatives:

• Extending the temporary land transfer duty concession for off-the-plan apartments, units and townhouses for an additional 6 months. The concession will now apply for contracts signed on or after 21 October 2024 and before 21 April 2027.
• Non-government schools which have up to $16,397 of income per student will be exempt from payroll tax from 1 July 2026. This threshold will be indexed to the Schooling Resource Standard.
• The motor vehicle duty concession for luxury green passenger cars will end on 1 July 2027.

Cost of living measures and new initiatives

The Budget provides $2.5 billion to address the cost of living challenges and supporting access to jobs. Major measures include:

• $860 million for the Social Housing Growth Fund over five years, which will be used to deliver 7,000 new social housing properties over the next 10 years.
• $759 million to provide a 20% rebate on annual car registration costs, available for up to two light vehicle registrations per person.
• $433 million to provide free public transport in April and May, followed by a 50% discount from June 2026 until the end of the 2026.
• $120 million for families with children at kinder and school.

This funding is part of $13.8 billion of new initiatives over the next five years, focused on:

• $4.1 billion for education
• $3.3 billion for health
• $2.2 billion for transport and planning
• $0.9 billion for treasury and finance
• $0.7 billion for families, fairness and housing
• $0.7 billion for jobs, skills, industry and regions

An additional $4.4 billion is allocated over the next five years for new capital expenditure covering new and upgraded schools, new trains, road and rail network maintenance, as well as infrastructure and equipment for essential health and emergency services.