EV FBT Exemption: What Every Employee Should Know in 2026

Australia’s electric vehicle market has evolved quickly, and 2026 looks set to be another landmark year. As more employees switch to EVs, the EV FBT Exemption remains one of the most powerful incentives available through salary packaging.

Understanding how the exemption works, who qualifies, and how it interacts with novated leasing can make a big difference in how much you save.

 

What the EV FBT Exemption Means

The FBT Exemption removes fringe benefits tax from eligible electric and plug-in hybrid vehicles that are financed through a novated lease for EV or provided by an employer. It effectively makes EVs cheaper for employees and simpler for employers to offer.

Under normal circumstances, employers would pay fringe benefits tax on the value of a company car. The EV exemption eliminates that cost, which means lower lease payments and greater after-tax savings.

For employees, this means you can drive a new electric car through EV novated leasing and have your repayments deducted from your pre-tax income. Over time, those savings can be substantial.

 

Who Qualifies in 2026

Eligibility remains straightforward but specific:

• The vehicle must be an eligible zero or low-emission vehicle.
  
• The car’s value must be below the luxury car tax limit for fuel-efficient vehicles.
  
• It must be leased or provided primarily for personal use through a novated lease arrangement.
  

If you are considering an EV novated lease, it’s worth checking the price cap, as it changes annually. The 2026 limit sits around $89,000, meaning popular models from Tesla, BYD, MG, and Hyundai may qualify.

To see if you and your vehicle fit the criteria, you can review Fingo’s Novated Lease Eligibility Guide.

 

Why It Matters for Employees

The combination of an EV FBT exemption and a novated lease FBT structure creates significant financial advantages. Employees can salary package lease payments, insurance, and running costs using pre-tax income, reducing their taxable earnings.

The result is not just savings at tax time but consistent, predictable monthly costs. Employees in cities like Sydney, Melbourne, and Brisbane are finding that EV novated leasing offers a more affordable path to driving new electric vehicles than traditional loans.

If you’re curious about the numbers, use the Novated Lease Calculator to compare pre-tax and post-tax repayments. It’s one of the simplest ways to understand how novated leasing works for an EV.

 

The Environmental and Business Benefits

The government introduced the exemption to accelerate Australia’s transition to cleaner transport. Businesses are increasingly using EV novated leasing programs to reduce fleet emissions while offering employees valuable benefits.

Fleet managers now see EVs as practical, not experimental. They appreciate predictable running costs, no fuel expenses, and long-term savings on servicing. For employees, salary packaging an EV provides all those advantages plus significant tax relief.

If you want to understand the broader policy, Fingo’s resources on the FBT exemption explain how both employees and employers can benefit under the current rules.

 

Planning Ahead

While the EV FBT Exemption continues in 2026, it’s essential to stay informed as government thresholds and qualifying vehicle lists evolve. Leases already in place generally retain their tax benefits for the duration of the contract.

Employees interested in electric cars should consider locking in an eligible vehicle sooner rather than later. Knowing what novated leasing is and how a novated lease works gives you the foundation to plan confidently for the future.