11 May 2026

Keen to take advantage of tax savings on your new EV? The window is closing

Thanks to the Federal Government’s electric car Fringe Benefit Tax (FBT) exemption, thousands of Australians have been making the switch to electric vehicles (EVs) for less than they'd pay for a comparable petrol model. But last night's Federal Budget confirmed that once the updated details are passed by the Senate, things are going to change. 

Here's the short version: if you've ever thought about getting an electric car, right now could be the best time to do it. 

See how much you could save with our novated lease calculator →

What's the FBT exemption and how does it work?

Since 2022 the Federal Government has offered an FBT exemption on eligible electric vehicles taken out with a novated lease. In plain terms, that means your eligible EV's finance repayments and running costs - including charging, insurance, registration, servicing and replacement tyres - can all be paid from your pre-tax salary through electric vehicle salary packaging without attracting FBT.

The result? You could pay less tax and your take-home pay potentially goes much further. Depending on your income and the car you choose, the EV novated lease savings could run into thousands of dollars every year.

A novated lease is the only way to access the electric car FBT exemption, and since it's arranged through your employer, there's no complicated setup on your end.

What did the Federal Budget change?

The 2026-27 Federal Budget handed down on May 12 confirmed the electric car discount won't last in its current form. The good news is it's being phased out gradually, so there's still time to act. Here's how the EV FBT exemption changes in Australia will roll out:

Now until 31 March 2027: full exemption

Nothing changes yet. Eligible electric cars in Australia in 2026 remain FBT-free under a novated lease. This is as good as it gets; 100% of your finance and running costs can be drawn from your pre-tax salary with no FBT payable under most circumstances.

1 April 2027 to 31 March 2029: electric car FBT cap introduced 

This is where the novated lease FBT exemption 2026 rules start to shift. The full exemption will continue for EVs priced under $75,000. Above that cap (but below the luxury car tax threshold), you'll receive a 25% discount on payable FBT. That’s still a solid saving, just not as significant as the deal that’s available now. 

From 1 April 2029: 25% discount for all eligible EVs 

After the FBT exemption review transition period ends in 2029, the full exemption will disappear. All EVs below the luxury car tax threshold will still receive a 25% fringe benefits tax electric vehicle discount going forward, but not the full amount.

You can read the government's full review here.

More choice than ever AND no fuel bill to worry about 

There's never been a better time to want an electric car. According to the government’s review, the number of available models has nearly tripled since 2021, with 59 EV models available under $60,000 by the start of 2026, including 13 under $40,000. 

EV sales have grown from just 2% of new car sales in 2021 to over 13% in 2025, and charging infrastructure has grown to match. Then there’s the cost of petrol prices. If fluctuating fuel costs have been making it harder to balance your budget, an electric vehicle could bring down your running costs. 

The best EV novated lease savings are available right now 

The electric car FBT exemption is still live, but last night's FBT exemption electric car Budget 2026 announcement confirmed it won't be around in its current form much longer. If you're thinking about making the switch, the case for acting before 31 March 2027 has never been clearer.

Want to see how much you could save? Try our obligation-free novated lease calculator → 

Important information: Information is general in nature and does not constitute financial or other professional advice, which you should obtain. It has been prepared without taking into account your objectives, financial situation or needs. Any references to government announcements, reviews or proposed changes are based on information available at the date of publication and may change (including through the legislative process). Outcomes may differ depending on the final law and any guidance issued by relevant authorities. All applications for credit are subject to credit approval criteria. Terms and conditions, fees and charges apply.