EV FBT Exemption End Date: What Changes on 1 April 2027 and 1 April 2029
The EV FBT exemption is being wound back in two steps, not switched off. The dates, the $75,000 line, what happens to existing leases, and what to do by when.
On this page
The electric car FBT exemption does not have an end date; it has two step-downs. On 5 May 2026 the federal government announced that the full exemption continues until 31 March 2027, that from 1 April 2027 it applies in full only to EVs costing $75,000 or less, with a 25 per cent discount on FBT for dearer EVs under the luxury car tax threshold, and that from 1 April 2029 every eligible EV gets the 25 per cent discount and nothing more. Existing leases are not affected, on the government’s word. As of 14 September 2026 the change is announced but not yet law. This page tracks the dates, what “existing leases” is likely to mean, which cars the $75,000 line catches, and what to do by when; the full picture of how an EV novated lease works is in our EV novated lease guide.
What exactly was announced?
The Treasurer and the Minister for Climate Change and Energy issued a joint media release on 5 May 2026 titled “fairer tax treatment to encourage affordable EVs”, following the statutory review that the 2022 legislation required. It describes three phases and says the changes “are estimated to save the Budget $1.7 billion over the five years from 2025-26.”
| Period | Eligible EV costing $75,000 or less | Eligible EV above $75,000 but under the LCT threshold |
|---|---|---|
| To 31 March 2027 | Full FBT exemption | Full FBT exemption |
| 1 April 2027 to 31 March 2029 | Full FBT exemption | 25 per cent discount on FBT payable |
| From 1 April 2029 | 25 per cent discount on FBT payable | 25 per cent discount on FBT payable |
The ATO’s summary of the measure explains how the discounts will work: the 100 per cent discount is “implemented through a 0% rate in the FBT statutory formula”, and the 25 per cent discount through a 15 per cent statutory formula rate instead of the usual 20 per cent. In plain terms, a car on the 25 per cent discount is valued for FBT at 15 per cent of its cost each year rather than 20 per cent, and the employer pays FBT, or you cancel it with post-tax contributions, on that reduced figure. Cars over the luxury car tax threshold were never eligible and stay that way. The import tariff exemption for eligible EVs continues.
Is it law yet?
No. The ATO page above, last updated 14 May 2026, says in its own words: “This measure is not yet law.” No bill had appeared on the Parliament of Australia bills list when we checked on 14 September 2026. That matters for two reasons. The government can still change the detail, as it did with the plug-in hybrid cut-off, which was legislated with a transitional rule the original announcement did not spell out. And the most important number, $75,000, has no definition yet: the release says “costing”, the ATO says “costing”, and neither says whether that is the list price, the FBT base value (which includes GST and dealer delivery but not registration or stamp duty) or something else. Until the bill is drafted, treat the figure as the car’s GST-inclusive price before on-road costs and leave a margin.
Will existing leases be affected?
The government’s release says “Existing leases won’t be impacted by the changes,” and the ATO repeats it. What that will mean in practice is the open question, and the best guide is what happened to plug-in hybrids.
When PHEVs lost the exemption on 1 April 2025, the ATO allowed an existing arrangement to keep it if there was a “financially binding commitment” in place before that date to continue providing the car, and only for as long as that commitment stayed the same. A break in the novation, a change of employer, a change to the lease payments or residual, or taking up an optional extension all ended the exemption. PwC’s tax alert on the 2026 announcement reads the new change the same way: grandfathering of existing leases is “consistent with the approach taken when PHEVs were removed”, provided the binding commitment remains unchanged.
If that holds, a lease signed before 1 April 2027 keeps the full exemption for its term, but re-novating it to a new employer after that date could bring it under the new rules. Nobody can promise otherwise until the bill is drafted, so if a job change inside the lease term is likely, factor that in now.
Which cars does the $75,000 line catch?
On current list prices before on-road costs, most of the best-selling EVs sit well under it: the Tesla Model Y RWD, Tesla Model 3 RWD, BYD Sealion 7 Premium, BYD Atto 3, Polestar 2 and Hyundai Ioniq 6 are all between about $42,000 and $68,000, and the Kia EV6 Air is just under at $72,660. The line catches the dual-motor and long-range versions of mid-size SUVs and sedans, and much of the European premium range; the dated price table is in the novated lease guide. The government’s own count in May 2026 was around ten EV models under $40,000 and one under $30,000, which is the market it says the change is aimed at.
What should you do, by when?
There are three cases, and only one of them is urgent.
The car costs $75,000 or less. The 2027 change does not touch you. The date that matters is 1 April 2029, when the full exemption ends for new arrangements. A lease signed before then keeps the full exemption for its term, so a five-year lease signed in early 2029 would run fully exempt to 2034. There is no reason to rush before 2027, and prices in this band are falling.
The car costs between $75,000 and $91,661. Sign before 31 March 2027 if you can. After that date the same car gets a 25 per cent discount, which leaves three quarters of the FBT to cancel with post-tax contributions, the way a petrol car works. On a $85,000 car the difference is several thousand dollars a year of after-tax salary for the life of the lease.
The car was over the luxury car tax threshold when first sold. Nothing changes; it was never eligible and will not become eligible. That includes a second-hand car that was over the threshold new.
In every case, confirm the car’s delivery date before you sign against a deadline. The PHEV cut-off caught buyers whose cars were ordered in time but delivered after 1 April 2025, and the ATO said it had “no discretion to extend this date, including where delivery delays occur due to unforeseen circumstances.” A lease is not “existing” until the car is delivered and the arrangement is binding.
Why the government changed it
The exemption worked better than its designers expected and cost a great deal more. The Treasury’s statutory review, released with the Budget, found the exemption had cost about $2 billion in its first three years against an original estimate of $205 million over four, on the NRMA’s report of the paper. The media release framed the change as focusing the concession on affordable cars now that “there were only two EVs under $40,000 - now there are around 10”, and noted that in March 2026, 22.9 per cent of new cars sold were electric or plug-in hybrid, up from 1.8 per cent in May 2022, with the strongest uptake outside the inner cities: Gosford, Kellyville, Werribee and Toowoomba were named. The 25 per cent discount from 2029 is described as permanent.
What the 25 per cent discount will feel like
From April 2029 an EV novated lease will look more like a petrol one. With the statutory rate at 15 per cent instead of 20, a $60,000 EV will carry an FBT taxable value of $9,000 a year instead of the $12,000 a petrol car of the same price carries, and instead of zero. To cancel that FBT, providers will structure a post-tax employee contribution of $9,000 a year, with the remainder of the lease pre-tax. The EV will still be cheaper to package than the petrol car, by a quarter of the FBT, and it will still be GST-free on the purchase price and cheaper to run. What goes is the full pre-tax treatment that makes the current deal so much better than everything else. Our EV novated lease guide explains the employee contribution method and the reportable fringe benefit that applies either way.
We will update this page when the bill is introduced and again when it passes. Figures on this page were checked on 14 September 2026.
Frequently asked questions
When does the EV FBT exemption end?
It does not end on a single date. Under the May 2026 federal Budget the full exemption continues until 31 March 2027. From 1 April 2027 it applies in full only to electric cars costing $75,000 or less, with a 25 per cent FBT discount for dearer EVs under the luxury car tax threshold. From 1 April 2029 the full exemption ends and every eligible EV under the threshold gets the 25 per cent discount instead.
Will my existing EV novated lease be affected by the 2027 changes?
The government says existing leases will not be affected. When plug-in hybrids lost the exemption in April 2025 the ATO honoured arrangements with a financially binding commitment on the cut-off date for the rest of their term, but treated a change of employer, a change to the payments or an optional extension as ending that commitment. Expect the same approach, and read the final legislation before assuming a mid-lease job change is safe.
Is the $75,000 cap law yet?
No. The ATO's page on the measure, last updated 14 May 2026, says it is not yet law, and no bill had appeared on Parliament's bills list when we checked on 14 September 2026. The government has announced its intent and the dates; the detail, including how a car's cost will be measured against $75,000, is still to be written.
Should I sign an EV novated lease before 31 March 2027?
If the car costs between $75,000 and $91,661, yes: signing before then keeps the full exemption for the whole lease rather than a 25 per cent discount. If the car costs $75,000 or less, the 2027 change does not touch you, and the date that matters is 1 April 2029, when the full exemption ends for every new lease. If the car was over the threshold when first sold, it was never eligible and nothing changes.