(VICTORIA, AUSTRALIA) — Victoria’s standout feature in Australia’s state budgets is not just high property taxes in dollar terms, but how dependent the state has become on property taxes compared with other revenue sources.
That distinction matters for migrants settling in Victoria, foreign investors buying Australian housing, and U.S. taxpayers with Australian real estate. The same Victorian settings that raise state revenue can also affect cash flow, rents, and transaction costs. For U.S. filers, they can also shape foreign tax credit planning and overseas reporting.
This article is current as of Tuesday, February 17, 2026, and focuses on tax year 2026 (returns filed in 2027) where U.S. filing mechanics are discussed.
1) Overview: Victoria’s property-tax reliance in context
When commentators say Victoria “relies” on property taxes, they are usually talking about several related measures, not just total dollars collected.
The Victorian Parliamentary Budget Office (PBO) uses a consistent methodology across states and a consistent forecast window. Its January 2026 report, State Comparison of Land Transfer Duty and Land Tax, focuses on the forward estimates from 2023–24 to 2028–29.
In Australian state budgeting, “property taxes” generally include:
- Land transfer duty (stamp duty) on property purchases
- Land tax on taxable land holdings (often with thresholds and rate scales)
- Related property levies, where applicable, such as vacancy-style surcharges or targeted charges tied to property development
Absolute dollars vs “reliance” measures
Two states can collect similar property-tax dollars, yet have different reliance. That is why the PBO compares multiple lenses:
- Per-person revenue (intensity per resident)
- Share of total state revenue (budget exposure)
- Share of state tax revenue (how central property is to the tax mix)
- Property taxes as a share of GSP (economic weight relative to the state economy)
For households, reliance often shows up as transaction costs (stamp duty) and holding costs (land tax). For budgeting, it signals how exposed the state is to the housing cycle.
2) Key metrics confirming Victoria’s lead
Victoria’s “highest reliance” claim is not based on one chart. It shows up across several headline indicators.
Per-person revenue: a pressure gauge
Per-person property-tax revenue is a useful proxy for how heavily the state leans on the property base relative to its population. In the PBO’s projections, Victoria leads by a clear margin across the mid-2020s, with per-person revenue rising into the mid-$2,000s.
This metric does not tell you who pays. It does tell you the scale of revenue the system is expected to extract per resident on average.
Share of total state revenue: the budget exposure measure
The share-of-revenue measure answers a different question: “If property turns down, how much of the budget is exposed?” In the PBO’s forward estimates, Victoria’s property taxes rise to the high teens as a share of total revenue.
That is why housing turnover, price growth, and construction volumes become budget issues, not only housing issues.
Share of state tax revenue: the “tax mix” reality check
Looking only at “total revenue” can hide a lot, because states receive grants and other inflows. The “share of state tax revenue” measure isolates how central property taxes are to Victoria’s own-tax base.
In the PBO figures, land tax plus stamp duty make up well over two-fifths of Victoria’s state tax revenue in the mid-2020s.
Property tax-to-GSP: the economic weight
A property tax-to-GSP ratio connects the tax take to the state’s economic output. In the PBO comparisons, Victoria also leads on this measure, with a ratio in the mid-2% range, above key peers.
Forecasts are not actuals. They are still useful for policy and planning because they show what the current law is designed to raise if the economy follows expected paths.
💡 Tax Tip: If you are comparing states, use at least two lenses. “Highest total dollars” can differ from “highest reliance” once population and revenue mix are considered.
3) Contributing factors driving Victoria’s reliance
Victoria’s reliance is driven by a mix of structure and policy.
Structural drivers: fewer easy alternatives
Some states receive more from royalties or other sources. When those sources are lower, budgets often lean more on taxes that are:
- administratively straightforward
- collected from an immobile base
- capable of being increased by changing rates, thresholds, or surcharges
Land is hard to move. That makes land tax a durable lever, even when unpopular.
Policy drivers: base broadening and targeted levies
Victoria has used multiple policy settings that expand the land-tax base and lift collections over time. One prominent example is the COVID Debt Levy, which the PBO shows as a major contributor within land-tax-related totals across the forward estimates.
Separately, threshold and rate changes can pull more owners into land tax. In the PBO discussion, lowering the general land tax threshold to $50,000 is a key design choice because it spreads the base to more holdings.
Stamp duty also matters. It tends to surge when turnover and prices rise. It can fall sharply when markets freeze.
Distribution: who tends to bear what?
As a rule of thumb:
- Stamp duty is concentrated on buyers when they transact. It is sensitive to mobility and turnover.
- Land tax is concentrated on owners of taxable land. It is sensitive to holdings and thresholds.
Those conceptual differences drive political debate, especially when rental supply, investment activity, and affordability are discussed.
4) Comparisons to other states (with consistent criteria)
The most common confusion is mixing up absolute revenue leadership with relative reliance leadership.
New South Wales can lead in total dollars in some years because it has a larger population and large property markets. Yet Victoria can still lead on per-person revenue or revenue shares.
Here is a side-by-side comparison using criteria readers can apply consistently.
Side-by-side comparison table (how to read Victoria vs peers)
| Category (criteria) | Victoria | New South Wales | Queensland | Northern Territory |
|---|---|---|---|---|
| Reliance (per-person revenue): higher = heavier intensity | Highest nationally in PBO forward estimates | Lower than Victoria | Lower than Victoria | Lower overall |
| Reliance (share of total state revenue): higher = budget more exposed to property | High teens by mid-to-late 2020s | Below Victoria on PBO comparisons | Below Victoria | Lower |
| Reliance (share of state tax revenue): higher = property dominates tax mix | Land tax + stamp duty above two-fifths | Below Victoria | Below Victoria | Lower |
| Economic weight (property tax-to-GSP): higher = larger slice of economy | Around mid-2% range in PBO | Lower than Victoria (low-to-mid 2% range) | Lower (sub-2% range) | Lower |
| Land tax design: threshold breadth and rate scale | Low general threshold ($50,000) broadens base | Thresholds differ by structure | Higher threshold in many cases (often cited $600,000 for individuals) | No land tax reported in PBO comparisons |
| Investor behavior lens: how settings may affect holding costs | Land tax is a larger holding-cost factor | Holding-cost profile differs | Holding-cost profile differs | Different incentives without land tax |
Because thresholds and rate scales differ, “who pays” can shift materially. A lower threshold tends to widen the land-tax base. A higher threshold tends to concentrate liability on fewer owners.
⚠️ Warning: Don’t treat stamp duty as a “tariff.” Tariffs are border taxes on imports. Stamp duty is a state transaction tax on property transfers.
5) Perspectives and impacts (housing, investment, and debt context)
The politics around property taxes often track three claims.
Critiques you will hear
Opposition figures and industry groups typically argue:
- higher land tax discourages investment
- higher transaction costs reduce mobility
- costs can flow through to renters over time
They often cite changes in investor property counts, lending flows, or listings. These measures can point in different directions, depending on timing and definitions.
Government defenses you will hear
Governments typically respond that:
- housing approvals and construction volumes matter more than investor sentiment alone
- targeted levies fund services, infrastructure, or budget repair
- shifting settings can be part of broader reform debates
Debt context
The PBO narrative sits alongside rising state debt and debt servicing pressure. When debt costs rise, stable revenue sources become more attractive. That can reinforce reliance on land-based taxes.
6) Data sources and timeframe (and how to keep it current)
The primary reference is the Victorian Parliamentary Budget Office report published January 2026: State Comparison of Land Transfer Duty and Land Tax. It analyzes the 2023–24 to 2028–29 forward estimates.
Forward estimates are projections under current settings. They can change with:
- updated state budgets
- mid-year fiscal updates
- rate and threshold changes
- housing market shifts
To verify current-year rates and thresholds, readers typically check state budget papers and the relevant state revenue office guidance. Those are the documents that reflect last-minute legislative updates.
📅 Deadline Alert: If you are a U.S. tax resident with Victorian property income in tax year 2026, your Form 1040 is generally due April 15, 2027. Many taxpayers abroad get an automatic June 15 filing extension, with interest still accruing. You can request to extend to October 15, 2027.
Where U.S. immigrants and visa holders can get tripped up (2026 U.S. tax year)
If you are a U.S. tax resident under the green card test or substantial presence test, you generally report worldwide income. That includes Australian rent and many gains. See IRS Publication 519 (U.S. Tax Guide for Aliens) at irs.gov (Publication 519 PDF) and the IRS international hub at irs.gov (International taxpayers).
Common mistakes I see with Australian property and U.S. filing:
- Not reporting rent on Form 1040 (usually Schedule E) because tax was paid in Australia.
- Treating stamp duty like an annual property tax. It is usually part of purchase cost basis, not a yearly expense.
- Missing foreign reporting. If foreign accounts exceed $10,000 aggregate, FBAR (FinCEN 114) is required. FATCA filing may also apply via Form 8938.
- Using the wrong currency conversion for income, expenses, and basis.
- Forgetting treaty positions. The U.S.–Australia treaty can affect sourcing and relief from double taxation. IRS Publication 901 is the IRS treaty guide.
For U.S. foreign tax relief mechanics, many taxpayers use Form 1116 (Foreign Tax Credit). Forms and instructions are at irs.gov (Forms & publications).
Quick U.S. filing checklist table (if you own Victorian property)
| Situation (tax year 2026) | Common U.S. form(s) | What it covers |
|---|---|---|
| Rental income or loss from Australia | Form 1040 + Schedule E | Report rent and deductible expenses in USD |
| Australian tax paid on rental income | Form 1116 (often) | Foreign tax credit rules and limits |
| Foreign bank accounts used for rent | FBAR (FinCEN 114) | Required if $10,000 aggregate exceeded |
| Larger foreign financial assets | Form 8938 (if thresholds met) | FATCA reporting for specified assets |
“You are [X] if…” (status summary)
- You are “Victoria property-tax exposed” if your housing plan depends on turnover timing, because stamp duty is a major transaction cost.
- You are “Victoria land-tax exposed” if you hold taxable land above the $50,000 general threshold, especially as rates and levies change.
- You are a “U.S. worldwide filer” if you meet the green card test or substantial presence test for tax year 2026, because Australian rent is typically reportable on Form 1040.
- You are an “international reporting filer” if your foreign accounts exceeded $10,000 aggregate at any time in 2026, triggering FBAR, and possibly Form 8938.
Action items for tax year 2026 (filed in 2027): gather Victorian settlement statements and annual land tax assessments, track rent and expenses in AUD and USD conversions, and confirm whether you must file Form 1116, FBAR, or Form 8938.
⚠️ Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.
