The EV Discount Review in 2026: What You Need to Know
In May 2026, the Australian Government announced updates to its Electric Vehicle (EV) discount following a formal review, subject to the proposed changes being passed by Parliament.
The review recognised the important role the EV Discount and novated leasing has played in supporting Australians to access cleaner cars, while noting its significant influence in growing the EV market here.
The government confirmed that changes will be brought in gradually across three phases, not removed suddenly. Importantly, all existing arrangements will be honoured until the end of their lease period.
Phase 1: As You Were
The current settings will remain until 31 March 2027. This means you can continue to pay for eligible EVs with before-tax dollars up to the luxury car tax (LCT) threshold, which will remain at $91,387.
Phase 2: Vehicle Price
From 1 April 2027, the EV Discount will be more closely targeted by vehicle price. Electric vehicles priced below $75,000 will remain fully Fringe Benefits Tax (FBT)-discounted, while vehicles priced between $75,000 and the luxury car tax (LCT) threshold of $91,387 will be eligible for a reduced 25% FBT discount. (For more information about FBT, click here.)
Phase 3: 25% FBT Reduction on All EVs
From 1 April 2029, a 25% FBT discount will apply to all electric vehicles priced below the LCT threshold. This will remain the policy, with no end date.
Driving EV Affordability
These changes reflect the government’s view that EV ownership is becoming more affordable, while continuing to support Australia’s transition to electric transport as part of broader emissions targets.
Making the EV Discount Work for You
The EV Discount has been a gamechanger for Australian car-buying conversation and consideration – not least that in 2022, there were only two EVs retailing for under $40,000. Today, there are around 10 – with one model (the BYD Dolphin Essential) below $30,000. Where EVs once dwarfed petrol vehicles for price, today parity is much closer.
Maxxia Is Here to Help
We know policy updates can raise questions, and we’re here to help. As one of Australia’s largest novated lease providers, with more than 30 years’ experience helping Aussies save tax by salary packaging a car, Maxxia is committed to keeping customers informed and supported. Our team is always available to explain how novated leasing works and what the current EV discount settings mean for you.
If you would like to learn more about how an EV on novated lease could work for you, select your desired vehicle and crunch the numbers in our handy calculator, or call us on 1300 123 123.
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