Victoria has legislated a steep rise in the annual congestion levy on inner-Melbourne car spaces, and the levy area now takes in more of the inner-east.
Victoria's State Revenue Office has confirmed that the congestion levy on car spaces in inner Melbourne will rise sharply from 1 January 2026. The change follows Royal Assent to the State Taxation Further Amendment Act 2025 on 25 November 2025.
The annual levy in the Category 1 area, which covers the CBD, rises to $3,030 for each leviable parking space. In the Category 2 area the rate becomes $2,150 a space. From 2027 both rates will move with the Consumer Price Index each year.
The levy area is also getting bigger. Category 2 now reaches inner-eastern suburbs including Burnley, Cremorne, South Yarra and Windsor, along with parts of Richmond, Abbotsford and Prahran. The Queen Victoria Market area moves from Category 1 to Category 2.
Some concessions come with the increase. Car spaces used only for residential parking are now outside the levy, so homeowners who hold only residential spaces no longer need to register. Government schools that offer free parking are exempt. Shopping centres and retailers in Category 2 can get a 50 per cent reduction for conditional free parking.
The levy is usually paid by car park owners and operators, but nothing stops them passing it on. People renting a commercial or public car space in the levy area should expect prices to rise from 2026. Owners who rent out a space should check whether it counts as residential or leviable.
Source: State Revenue Office Victoria — Changes to state taxes November 2025
Photo: Philip Mallis / Wikimedia Commons, CC BY-SA 2.0. Melbourne CBD skyline seen from a car park in Camberwell (2021).