Neo-Nazi Jacob Hersant, 25, remained expressionless as Magistrate Brett Sonnet gave him the sentence indication on Wednesday morning.
He was on Tuesday found guilty of intentionally performing the salute on October 27, 2023, about six days after Victorian laws banning the gesture came into effect.
Video played in court showed Hersant raising his arm to salute in front of journalists and camera crews outside the County Court.
Jacob Hersant told journalists he would continue to perform the Nazi salute away from the police. (Con Chronis/AAP PHOTOS)
He was then captured saying "nearly did it - it's illegal now" and "Australia for the white man, heil Hitler", before walking away.
Hersant's lawyer Tim Smartt told the court his client should be fined $1500 as the offending was less serious and he should not be punished for his political views.
But prosecutor Daniel Gurvich KC pushed for jail time, saying Hersant's salute and comments outside court had vilified minority groups.
Mr Gurvich also noted comments Hersant made to journalists outside court on Tuesday, when he said he would continue to perform the salute away from the police.
Mr Sonnet agreed, saying a jail term was the only appropriate sentence.
The magistrate said he wanted to remand Hersant in custody immediately while he considered the length of the prison term.
But Mr Smartt argued he should be released on appeal bail.
The case was adjourned to 2pm on Wednesday.