Congestion levy changes from 1 January 2026
What is the congestion levy?
The congestion levy is an annual levy charged on off-street car parking spaces in two inner Melbourne levy areas – being Category 1 and Category 2.
An exemption or concession may apply, subject to legislative requirements being met.
What are the changes?
From 1 January 2026:
1. The Category 1 levy increases to $3,030 per car park (from $1,750) and the Category 2 levy increases to $2,150 per car park (from $1,240).
2. The Category 2 levy area will be expanded to include areas in Richmond, Abbotsford and along St Kilda Road.
The updated congestion levy map, including the expanded Category 2 levy area, can be viewed on the State Revenue Office of Victoria’s website.
What do I need to be aware of?
The State Revenue Office of Victoria (SRO) has started sending notifications to owners in the expanded Category 2 suburbs advising them of the upcoming changes.
Landlords (and their property managers) should start reviewing their congestion levy position ahead of 1 January 2026, including considering any applicable exemptions or concessions and if the levy is recoverable from existing commercial tenants. The same applies for any new leasing agreements being entered into now.
Landlords should be cognisant that the levy is assessed based on the use of the parking spaces in the preceding calendar year. This means the 2026 levy is based on how the spaces are used in 2025.
Tenants, and prospective tenants, should likewise review their existing and proposed leasing agreements to understand their exposure and liability for the levy.
Sales of properties in the expanded Category 2 suburbs will be affected by the changes. Vendors must disclose the congestion levy in the Vendor Section 32 Statement and purchasers need to review the levy position as part of their due diligence. Vendors and purchasers must notify the SRO of the change in ownership within one month of settlement and the purchaser must lodge ongoing congestion levy annual returns.
For further information on the congestion levy changes, or if you require assistance in reviewing leasing agreements and/or any applicable exemptions or concessions, please do not hesitate to contact Nafsika Starvaggi or Jonathan Tisher, or a member of our property team.
