The rate peg

Rate peg for the 2025-26 financial year

IPART has set the rate peg for the 2025-26 financial year using our new rate peg methodology. The core rate peg for the 2025-26 financial year for each council (i.e. before applying the population factor and population adjustment factor) ranges from 3.6% to 5.1%.

IPART’s rate peg takes into account the Base Cost Change (BCC) by council group (metropolitan, regional and rural), in addition to a population factor based on each council’s population growth and an Emergency Services Levy (ESL) factor to reflect annual changes in each council’s ESL contributions that differ from the changes to the council’s BCC.

The rate pegs for the 2025-26 financial year also include a council-specific ESL adjustment for some councils, a population adjustment for COVID-19 era population movements (impacting 13 metropolitan councils), and an adjustment for the cost of running elections. 

The population factor in the rate peg aims to maintain the amount of rates collected per person in areas that have a growing population. The final rate peg for the 2025-26 financial year for each council (i.e. after applying the population factor) ranges from 3.7% to 7.6%.

For more information on the rate peg for the 2025-26 financial year, please see our Information Paper, which includes the rate peg for each council, and our Media Release.

We applied our new rate peg methodology

We used our new rate peg methodology to set the rate peg for the 2025-26 financial year.

We developed our new rate peg methodology following extensive consultation with stakeholders. The new methodology will produce rate pegs that more accurately reflect the increase in costs for each council. It will also better account for the diversity among NSW councils and help ensure ratepayers contribute only to costs relevant to their local government area.

For more information on our new rate peg methodology, please see Review of the rate peg methodology.

For the first time, we consulted with stakeholders to inform our rate peg decisions for the 2025-26 financial year. We held a ratepayer workshop and established a Council Reference Group to hear stakeholder views and identify any unintended consequences arising from the implementation of the new rate peg methodology.

For more information, please see our Council reference group and ratepayer workshop webpage.

What is the rate peg?

The rate peg is the maximum percentage amount by which a council may increase its general income for the year. For most councils, general income consists entirely of rates income. The rate peg does not apply to stormwater, waste collection, water and wastewater charges.

Councils can increase general income by up to the rate peg, less than the rate peg, or not at all. If a council does not apply the full rate peg increase, it will be able to catch up on the shortfall in general income over any one or more of the next 10 years. Councils have discretion to determine how to allocate the rate peg increase between different ratepayer categories.

How the rate peg is set

Under our new rate peg methodology, the rate peg is typically based on the BCC by council group, a productivity factor, a population factor for each council and an ESL factor for each council. However, IPART has discretion over the rate peg percentage and can adjust the rate peg above or below the percentage produced by the BCC, productivity factor, population factor and ESL factor, if we consider this appropriate. 

How the rate peg affects individual rates

The rate peg sets the maximum increase in each council's general income for the financial year. The rate peg applies to general income in total, and not to individual ratepayers’ rates. As long as its general income remains within the set maximum increase, councils may increase categories of rates by higher or lower than the rate peg.

Individual rates are also affected by other factors, such as land valuations, which can affect percentage changes to rates alongside the rate pegging process. The rate peg affects some other council fees in addition to household and business rates. More information is available under our Local Government Frequently Asked Questions.

Under the Local Government Act, councils are able to seek additional increases in general income above the annual rate peg, by applying to IPART for a 'special rate variation'.

Estimating the rate peg for the 2025-26 financial year and future years

Estimating future rate pegs

To assist councils in their long-term financial planning, we have provided a Fact Sheet with suggestions on estimating the rate peg under the new rate peg methodology which we introduced after our 2023 Review of the rate peg methodology. This includes advice on how each rate peg component can be estimated for the following 2025-26 financial year and the years after.

Special variation applications

Councils applying for a special variation in 2025-26 should use the 2025‑26 rate peg set by IPART in their applications for the first year. For further information, please refer to our special variation webpage here.

Long term financial plan reviews and updates

We encourage councils that are updating or reviewing their Long Term Financial Plans to refer to the Office of Local Government’s Integrated Planning & Reporting Handbook for Local Councils in NSW, and to seek advice from the Office of Local Government where necessary to determine their revenue forecasts for rates and charges for future years.

Minimum rates

Under the Local Government Act 1993, a council may specify a minimum amount of a rate to be levied on each parcel of land. If a council resolves to adopt a minimum amount of a rate, the minimum amount must not exceed the relevant statutory limits, unless the council applies to increase its minimum rate by making a minimum rate increase application to us (more information here).

The statutory limits for minimum rates for the 2024-25 financial year are:

• $617 for the minimum amount of an ordinary rate (see section 126 of the Local Government (General) Regulation)
• $2 for the minimum amount of a special rate.

We have recommended to the Minister for Local Government that the minimum rate for 2025-26 be increased to $639. We calculated this amount by applying the lowest 2025-26 core rate peg to the current minimum rate. 

Rate Peg in recent years