EV Salary Sacrifice & FBT Exemption Australia 2026
Australia's Electric Car Discount makes salary sacrificing an EV one of the most tax-effective ways to acquire a car. With zero Fringe Benefits Tax on eligible EVs under $91,387, employees save thousands per year compared to a petrol vehicle novated lease.
How the FBT Exemption Works
Choose an eligible EV
Battery electric vehicle (BEV) with a first retail price below $91,387. PHEVs no longer qualify from April 2025.
Set up a novated lease
Your employer arranges the lease. Repayments come from your pre-tax salary, reducing your taxable income.
Save on FBT
Your employer pays zero FBT on the car benefit. The saving passes through to you as lower repayments.
How Much You Save by Income
Based on a $55,000 EV on a 3-year novated lease. Savings compared to buying outright with after-tax income.
| Annual salary | Marginal tax rate | Annual saving | Monthly benefit | 3-year total saving |
|---|---|---|---|---|
| $80,000 | 32.5% | $4,200 | $350 | $12,600 |
| $100,000 | 37.0% | $6,500 | $542 | $19,500 |
| $120,000 | 37.0% | $7,800 | $650 | $23,400 |
| $150,000 | 45.0% | $9,200 | $767 | $27,600 |
| $180,000 | 45.0% | $10,500 | $875 | $31,500 |
| $200,000 | 45.0% | $11,400 | $950 | $34,200 |
Estimates only. Actual savings depend on your specific tax situation, lease terms, and vehicle. Consult a financial adviser for personalised advice.
FBT-Eligible EVs Under $91,387
13 of Australia's most popular EVs qualify for the FBT exemption.
BYD Dolphin
FBT exempt427km range | 60.4kWh
MG4
FBT exempt450km range | 64kWh
GWM Ora
FBT exempt420km range | 63kWh
BYD Atto 3
FBT exempt420km range | 60.5kWh
BYD Seal
FBT exempt570km range | 82.5kWh
Volvo EX30
FBT exempt344km range | 51kWh
Tesla Model 3
FBT exempt513km range | 60kWh
Cupra Born
FBT exempt511km range | 77kWh
Tesla Model Y
FBT exempt455km range | 60kWh
Polestar 2
FBT exempt534km range | 79kWh
Kia EV6
FBT exempt528km range | 77.4kWh
Hyundai Ioniq 5
FBT exempt507km range | 77.4kWh
BMW iX1
FBT exempt440km range | 66.5kWh
What to Include in Your Novated Lease
Vehicle costs
- Vehicle purchase price
- Registration and CTP
- Comprehensive insurance
- Scheduled servicing
- Tyres and roadside assist
Running costs
- Home electricity for charging
- Home charger installation (ask your provider)
- Public charging costs
- Charger hardware (if allowed as accessory)
- Extended warranty (optional)
Already Salary Sacrificing? Get Your Home Charger
If you have already leased an EV through salary sacrifice (or you are about to), make sure you have a home charger installed. PumpSwap connects you with local electricians for free, obligation-free quotes.
Get Free Charger Install QuotesEV Salary Sacrifice FAQ
How does the EV FBT exemption work in Australia?
Under the Electric Car Discount (Treasury Laws Amendment 2022), zero-emission vehicles provided to employees via salary sacrifice are exempt from Fringe Benefits Tax. This means your employer does not pay the 47% FBT rate on the car benefit, which translates to significantly lower novated lease repayments compared to a petrol vehicle. The exemption applies to vehicles first used from 1 July 2022 onwards.
Which EVs are eligible for the FBT exemption?
The FBT exemption applies to zero-emission vehicles with a value at first retail sale below the luxury car tax threshold for fuel-efficient vehicles ($91,387 for 2025-26). Currently 13 of the 15 most popular EVs in Australia qualify, starting from the GWM Ora at $31,760.
How much can I save with EV salary sacrifice?
Savings depend on your marginal tax rate and the vehicle price. On a $100,000 salary sacrificing a $55,000 EV, you save approximately $6,500 per year compared to buying the car outright or using a traditional novated lease on a petrol vehicle. Higher income earners save more due to higher marginal rates: a $150,000 salary saves roughly $9,200 per year.
Can I include home charging costs in my salary sacrifice?
Yes. Running costs associated with the novated lease, including home electricity used for charging, can be included in your salary sacrifice package. Some employers also allow the home charger hardware and installation as an accessory under the lease. Check with your novated lease provider for specifics, as the treatment varies.
Does the FBT exemption apply to plug-in hybrids (PHEVs)?
No. From 1 April 2025, plug-in hybrid electric vehicles (PHEVs) are no longer eligible for the FBT exemption. Only battery electric vehicles (BEVs) and hydrogen fuel cell vehicles qualify. PHEVs entered into arrangements before 1 April 2025 retain their exemption for the duration of that arrangement.
Official Sources
- ATO Electric Cars Exemption - official FBT exemption guidance
- ATO Luxury Car Tax thresholds - $91,387 fuel-efficient vehicle cap (2025-26)
- ATO PHEV FBT changes - PHEV exemption ended 1 April 2025
- Treasury Laws Amendment 2022 - Electric Car Discount legislation
This page is general information only and not personal financial or tax advice. Consult a registered tax adviser before salary-sacrificing a vehicle.