FBT Exemptions and Savings Explained
Announced by the Australian Federal Government on 5th May 2026, the full Electric Car Discount will remain for most electric vehicles (EVs) in Australia, offering essential cost-of-living relief for families until 2027. Celebrating this announcement, the Electric Vehicle Council (EVC) described it as a victory for Australian families. n
Starting in April 2027, EVs priced up to $75,000 will benefit from a full FBT exemption. Vehicles priced between $75,000 and the fuel-efficient Luxury Car Tax (LCT) threshold, currently around $91,000, will enjoy a 25% FBT discount. By April 2029, all eligible EVs below the LCT threshold will receive a 25% FBT discount.n
Julie Delvecchio, the Chief Executive of the EVC, affirmed that the decision provides Australians with a clear path to transition to electric vehicles without immediate changes. “This is good news for everyday Australians who are doing the sums on going electric,” Delvecchio remarked.n
Long-term Savings and Market Impactn
Households save approximately $3,000 annually on fuel and maintenance with electric vehicles. This aligns with Australia’s target, advised by the Climate Change Authority, of achieving five million EVs on the roads by 2035. The policy changes are expected to significantly contribute to this goal.n
“This decision means most electric cars in Australia will remain eligible for the Electric Car Discount, allowing people to save thousands on their annual fuel bills,” Delvecchio emphasised. Under the updated settings, no changes will affect until 1 April 2027. Existing arrangements will be grandfathered, ensuring current EV drivers and leaseholders remain unaffected. This stability is expected to continue supporting Australians facing cost-of-living pressures while providing financial sustainability for the incentive.n
Keeping EVs accessible is crucial for outer suburban households, according to the Electric Vehicle Council. People in these areas drive more and spend more on fuel, making them strongly represented in EV leasing uptake. This highlights the real savings where it matters most.n
The Federal Government’s phased approach ensures that families can plan their budgets confidently, knowing the Electric Car Discount will provide sustained financial relief in the years to come.
