Government EV-Novated Lease Incentive Review in 2026

In May 2026, the Australian Government announced proposed updates to its Electric Vehicle (EV) discount following a formal review. These changes are still subject to being passed by Parliament.

The review highlighted the important role the EV Discount and novated leasing has played in helping Australians access cleaner cars, while also supporting the growth of the EV market locally.

Rather than removing the discount all at once, the government has confirmed the changes will be introduced gradually across three phases. Importantly, if you already have an arrangement in place, it will continue until the end of their lease period.

Phase 1: No Changes For Now

Until March 31 2027, everything stays as it is. This means you can continue to pay for eligible EVs using your before-tax salary up to the luxury car tax (LCT) threshold of $91,387.

Phase 2: Changes Based on Vehicle Price

From 1 April 2027, the EV Discount will become more targeted based on the price of the vehicle. EVs priced under $75,000 will continue to receive a full Fringe Benefits Tax (FBT) exemption. For vehicles priced between $75,000 and the luxury car tax (LCT) threshold of $91,387 a reduced 25% FBT discount will apply. If you’d like to learn more about FBT, you can find more information here.)

Phase 3: A Consistent 25% FBT Discount

From 1 April 2029, a 25% FBT discount will apply to all eligible electric vehicles priced below the LCT threshold. This become the ongoing policy, with no end date.

Supporting More Affordable EVs

These changes reflect the government’s view that EV ownership is becoming more affordable for Australians. At the same time, the discount will continue to support the shift towards electric transport as part of broader emissions goals.

Making the EV Discount Work for You

The EV Discount has played a key role in changing how Australians think about buying a car. Not long ago, options were limited – in 2022,  there were only two EVs available for under $40,000. Today, there are around ten – including models like the BYD Dolphin Essential, priced below $30,000. While EVs were once significantly more expensive than petrol vehicles, the gap is now much closer – making them a more realistic option for many Australians

RemServ Is Here to Help

We know policy updates can raise questions, and we’re here to help. As one of Queensland’s largest novated lease providers, with more than 25 years’ experience, RemServ is committed to keeping customers informed and supported. Our team is always available to explain how novated leasing and the EV Discount works.  

If you would like to learn more about how you could save tax on an EV through a RemServ novated lease, select your desired vehicle and get your estimated savings here, or call us on 1300 731 429.