Congestion levy

What is the congestion levy?

The congestion levy aims to reduce traffic congestion in central Melbourne by encouraging motorists to use public transport more often.

Unless an exemption or concession applies, the levy is charged each calendar year on off-street private and public car parking spaces in 2 specified levy areas.

The congestion levy is changing from 1 January 2026.

Where are the levy areas?

The levy areas are located within inner Melbourne and comprise a category 1 (red) area and a category 2 (blue) area, with each area attracting different levy amounts. The extended area covers the suburbs of Burnley, Cremorne, South Yarra, and Windsor, and parts of the suburb of Richmond (excluding the area around Victoria Gardens Shopping Centre), Abbotsford and Prahran and includes areas in proximity to Chapel Street, Bridge Road, Swan Street, Victoria Street, Hoddle Street and Punt Road. 

Additionally, the Queen Victoria Market will move from the category 1 area to the category 2 area, meaning that parking spaces in the Queen Victoria Market area are subject to the lower category 2 rate from the 2026 levy year.

Prior to 1 January 2026, the levy areas are located within inner Melbourne and comprise a category 1 (red) area and a category 2 (blue) area, with each area attracting different levy amounts.

What is a parking space?

A parking space is an area that is:

• used for parking a vehicle, or
• set aside for parking a vehicle, regardless of whether it is being used as a parking space.

A parking space does not need to be marked out by permanent lines. Where an area is used or set aside for parking but does not have any line markings, each 25.2 square metres is considered a parking space.

Placing a sign or a temporary barrier around a space to indicate that it is not a parking space is not evidence to prove that the area is not a parking space.

Details on how to treat a space that allows for the parking of multiple vehicles are available in Revenue Ruling CL-001: Congestion levy - parking space for multiple motor vehicles.

From 1 January 2026, a space that is used exclusively for the parking of a motor vehicle for residential purposes (including a temporary stay in a hotel, serviced apartment or club that provides accommodation) is no longer subject to congestion levy.

Public car parks and private car parks

For levy purposes, a public car park predominantly provides parking spaces for use by the public. All other car parks that are not open to the public are considered private car parks.

Who pays the levy?

Public car parks

For a public car park, the owner and operator are jointly and severally liable for the levy as at 1 January of each assessment year, unless an exemption or concession applies.

In most cases, the owner is the person who holds a freehold interest in the land on which the car park is situated. If the car park is situated on Crown land, the owner is the Crown. If a lease or licence has been granted over the Crown land, the owner is the lessee or licensee.

Private car parks

For a private car park, the owner is liable to pay the levy as at 1 January of each assessment year unless an exemption or concession applies.

What if I rent out a parking space?

If you own a property within the congestion levy areas and rent it and an attached parking space(s) out, you may be liable to pay the congestion levy depending on how the parking space is used by your tenant.

Similarly, if you lease your parking space separately from your commercial or residential property (for example, on online booking sites for car space rentals), you may, depending on how your lessee uses the parking space, be required to register for and pay the congestion levy.

Can I pass on the levy amount?

Yes, the cost of the levy can be passed on. This is done in different ways depending on whether you are a public car park owner or operator or a private car park owner.

Public car parks

The arrangement between the owner or operator could be such that only one party has the right to increase parking fees. Under these circumstances, the party who has the right to increase parking fees but does not bear the responsibility for paying the levy, must indemnify the other for the levy amount.

Private car parks

Where a private car park owner allows another person to use a parking space under an agreement, for example, a lease, the person using the parking space must pay the levy amount and any respective GST to the owner. If the person is using the parking space for an exempt purpose, they are required to provide the car park owner with a completed exemption claim form.

Read more about renting out a parking space.

How much is the levy?

In 2026, the levy for each non-exempt parking space is: 

• Category 1 area - $3,030
• Category 2 area - $2,150

Levies are indexed annually for the consumer price index (CPI) and adjusted levy amounts are published here in November each year.

The levy assessment is calculated based on the use of parking spaces in the preceding calendar year. For example, the 2026 levy assessment is calculated based on the use of parking spaces during the 2025 calendar year.

 Historical levy rates

Register for the levy

Generally, you need to register every time you become the owner of a public or private car park. 

For public car parks, the operator must register in addition to the owner. The owner can, on their registration form, nominate the operator to lodge the annual returns and receive all correspondence and assessments on their behalf.

You must register within one month of becoming an owner or operator of a car park.

Private car park owners and public car park owners and operators must register car park(s) in the expanded area by 21 January 2026 if the owner owned the car park on 1 January 2026. If the owner or operator became the owner or operator of the car park after 1 January 2026, the application to register the car park must be made within one month after becoming the owner or operator. 

Register as a car park owner or operator

What is an annual return and assessment?

An annual return is your declaration of the number of parking spaces within the car park that you own or operate and how you claim an exemption or concession.

After registering, you will receive an annual return from us. Usually this is sent out each November but this year (2025) you will receive it in December. You must complete the return and send it back to us by 21 January the following year.

We use this information to calculate your assessment, which is sent in mid-March. You can pay in full or in equal, quarterly instalments (21 June, 21 September, 21 November and 22 February).

Calculating the levy

Your annual levy is calculated on the number of non-exempt parking spaces in your car park in the previous calendar year multiplied by the levy amount per parking space for the current calendar year.

For example, a 2026 assessment is based on the number of your non-exempt spaces from 1 January to 31 December 2025, multiplied by the amount of the 2026 levy for your relevant area.

Calculate your levy (public)

Calculate your levy (private)

Buying a car park or property with car spaces

If you buy a car park or a property to which parking spaces are attached or associated, you need to register for the levy within one month of settlement.

As the new owner of the car park, you will be issued a levy assessment in the year following the change of ownership.

Selling a car park or property with car spaces

If you sell a car park or a property to which parking spaces are attached or associated, you need to change your details with us within one month of settlement.

If you sell the car park or property during an assessment year, for example 2026, you are still liable for the levy for that assessment year because you owned or operated it on 1 January 2026.

Getting it right

Our priority is to help you pay the right amount of tax at the right time. Learn more about how we do this.