The rate will decrease from 4.85 per cent to 3.65 per cent for business “based primarily in regional Victoria”.

The payroll tax-free threshold will increase to $625,000 from July 1 this year, and to $650,000 next year.

Farmers will have duties removed on policies that insure agricultural products against damage from flood, fire and other accidental provisions.

Treasurer Tim Pallas announced the changes during the release of the budget in Melbourne on Tuesday.

He said the payroll tax changes would make it easier to do business in regional Victoria.

“It means Victorian regional businesses will pay the lowest rate of payroll tax in the nation,” Mr Pallas said.

The state government also trumpeted an estimated $4 billion in investment for regional Victoria, but it was unclear what the figure was as a percentage of total statewide expenditure.

Mr Pallas said it was the “biggest investment in regional Victoria in the history of the state”.

“It is being invested in schools and hospitals, road and rail, community facilites and organisations, which are at heart of why more and more people are choosing to live in reg Victoria,” he said.

The First Home Owners Grant was also doubled to $20,000 for new homes in regional Victoria.