Labor extends EV tax break to encourage cheaper vehicles amid soaring fuel prices
Summary
Australia’s Labor government will keep its electric vehicle (EV) tax break until March 2027 to help make EVs more affordable amid rising fuel prices caused by the Iran war. After that, the tax discount will gradually reduce, focusing on cheaper EVs to keep the program financially sustainable.Key Facts
- The EV tax discount exempts eligible electric cars from a fringe benefits tax (FBT) when leased.
- The full tax break is extended until the end of March 2027.
- From April 2027 to April 2029, full FBT discounts apply only to EVs under $75,000.
- EVs priced between $75,000 and the luxury car tax threshold ($91,387) get a reduced 25% FBT discount in that period.
- After April 2029, all eligible EVs under the luxury car tax threshold will receive a permanent 25% FBT discount.
- Rising fuel prices from the Iran war have increased EV sales; EVs now make up 15% of new car sales in March, double from last year.
- The cost of the EV tax break program is now estimated at $10.1 billion through 2029, much higher than the original $605 million estimate.
- Chinese EV makers like BYD sell cars for as low as $26,000, increasing affordable EV options.
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