The EV discount is changing. Here's what that means for you.

The Australian Government has announced a phased update to the Electric Car Discount. Nothing changes until April 2027, existing leases are protected, and EVs through novated leasing still make financial sense.

The EV discount isn't disappearing — it's evolving.

In May 2026, the Government completed its formal review of the Electric Car Discount and announced a staged transition across three phases. Existing arrangements are fully protected, and the first changes don't take effect until April 2027.

Here's exactly what's changing, when it happens, and what you should do about it.

What changes and when

Phase 1 — Now to 31 March 2027 Nothing changes. Eligible EVs up to the Luxury Car Tax (LCT) threshold of $91,387 remain fully exempt from Fringe Benefits Tax (FBT).

Phase 2 — 1 April 2027 to 31 March 2029 EVs under $75,000 keep the full FBT exemption. EVs between $75,000 and the LCT threshold drop to a 25% FBT discount.

Phase 3 — From 1 April 2029 A 25% FBT discount applies to all eligible EVs under the LCT threshold, permanently.

LCT threshold (FY2025–26): $91,387. Subject to annual indexation.

Already in a lease? You're protected.

The Government has confirmed that all existing novated lease arrangements will be grandfathered — your lease runs to its end date under the same settings it started on.

Where do you sit?

If you're already in an EV novated lease, nothing changes for you. Your arrangement is protected for its full term.

If you're considering an EV now, you're in the best position. Start a novated lease before 1 April 2027 and you lock in the full FBT exemption for the life of that lease.

If you're thinking longer term, EVs under $75,000 keep the full exemption until 2029. After that, a permanent 25% FBT discount still makes novated leasing considerably cheaper than buying outright.

EVs are more affordable than they were. The numbers still work.

When the Electric Car Discount launched in 2022, two EVs retailed under $40,000. Today there are around ten, including models below $30,000. The Government's own review found EVs can save drivers around $26,500 in lifetime fuel costs, based on December 2025 fuel prices.

The discount is being wound back because EVs are cheaper than they used to be, not because the policy has failed. Through a Simplygreen novated lease, you're still paying for your car, charging, insurance, registration and servicing from pre-tax dollars. That calculation holds up across all three phases.

Frequently asked questions

Does the EV discount still apply in 2026? Yes. Nothing changes until 1 April 2027. Eligible EVs up to the LCT threshold ($91,387) are fully FBT-exempt right now.

What counts as an eligible EV? Any fully battery-electric vehicle purchased through a novated lease, priced below the LCT threshold. PHEVs aren't included. The ATO website has full eligibility criteria.

If I start a lease now, am I protected from future changes? Yes. Novated leases established before 1 April 2027 will be grandfathered and won't be affected by the proposed future changes.

What's the LCT threshold? $91,387 for FY2025–26, indexed annually. We'll keep this page updated.

What happens to EVs over $75,000 after April 2027? They receive a 25% FBT discount rather than the full exemption until March 2029, then the same 25% discount as everything else from April 2029 onward.

Is novated leasing still worth it after the changes? Yes. Pre-tax dollars still cover the car and its running costs. The EV discount is one part of the equation, not the whole thing.

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