Labor extends EV tax break to encourage cheaper vehicles amid soaring fuel prices
The Australian government has extended its electric vehicle (EV) fringe benefits tax (FBT) discount in full for another year amid rising fuel prices linked to the Iran war. After March 2027, the full discount will only apply to EVs costing under $75,000, with further reductions planned by 2029. The scheme's cost has surged from an initial $605 million projection to $10.1 billion, prompting a phased wind-down to ensure financial sustainability.
- ▪The EV FBT discount was initially projected to cost $605 million but is now estimated at $10.1 billion over seven years.
- ▪The full FBT discount will apply only to EVs under $75,000 from April 2027 to March 2029.
- ▪EVs costing more than $75,000 but below the luxury car tax threshold will receive a 25% FBT discount during the second phase.
- ▪From April 2029, all eligible EVs will receive a permanent 25% FBT discount.
- ▪EVs made up 15% of new car sales in March 2026, double the share from the previous year.
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When Labor first pitched the EV discount before the 2022 election, it was projected to cost $605m in the seven years to 2029. Treasury most recently estimated it would cost $10.1bn over the same period. Photograph: Dan Himbrechts/AAPView image in fullscreenWhen Labor first pitched the EV discount before the 2022 election, it was projected to cost $605m in the seven years to 2029. Treasury most recently estimated it would cost $10.1bn over the same period. Photograph: Dan Himbrechts/AAPElectric vehiclesLabor extends EV tax break to encourage cheaper vehicles amid soaring fuel pricesAs the cost of the scheme blows out, the government has announced the full discount will be retained for another year, after which it will only apply to EVs costing less than $75,000 Get our breaking news email,…
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