In December 2024, the Victorian Government announced changes to the congestion levy for parts of inner Melbourne, coming into effect from January 2026. The levy acts act to reduce traffic congestion in central Melbourne by encouraging motorists to use public transport more often. The congestion levy is a tax designed to reduce traffic congestion in central Melbourne by discouraging the use of private vehicles whilst promoting public transport.
The congestion levy applies annually to off-street parking spaces in two designated levy zones. The category 1 (red) area has a higher rate, and the category 2 (blue) area has a lower rate. A parking space includes any area used or allocated for parking, whether marked or unmarked, with every 25.2 square metres of unmarked space considered one parking space. Public car parks, primarily serving public use, have shared liability between the owner and operator for the levy, while private car parks place the liability solely on the owner.
From 1 January 2026, significant updates to the levy will take effect. The category 2 area will expand eastwards to include suburbs along Hoddle Street and Punt Road, encompassing inner-eastern suburbs near the CBD. Additionally, levy rates will increase, with the category 1 rate rising from $1,750 to $3,030, and the Category 2 rate increasing from $1,240 to $2,150 per parking space. These changes aim to align Melbourne’s levy rates with Sydney’s and reduce congestion in areas close to the CBD. Real estate agents managing properties in these zones should anticipate the levy’s impact on property owners and tenants, particularly for properties with off-street parking.
Find more information on the congestion levy on the SRO website here