Benefits
Tax on an electric company car in 2026 and 2027
Last updated 16 October 2026
An electric company car gets €30,000 off its value for company car tax in 2026, falling to €15,000 in 2027. What that means for the tax you pay.
A company car you can use privately is a benefit in kind (a taxed perk from work). It is taxed as a percentage of its Original Market Value (OMV). Fully electric cars get two reductions to that value before the percentage is applied. That is why they cost far less in tax than a petrol or diesel car at the same price. The relief is shrinking each year.
The reductions by year
| Year | Electric car reduction | General reduction | Total off the OMV |
|---|---|---|---|
| 2025 | €35,000 | €10,000 | €45,000 |
| 2026 | €20,000 | €10,000 | €30,000 |
| 2027 | €10,000 | €5,000 | €15,000 |
| 2028 | €0 | €2,500 | €2,500 |
The electric car reduction runs to the end of 2027 under current law. The general reduction applies to every car except the highest-emitting category, and tapers to €2,500 in 2028. Budget 2027 did not change either; it extended the separate Vehicle Registration Tax relief on electric cars to the end of 2028.
A lower rate too
From 2026, zero-emission cars have their own category (A1), with the lowest percentages: 15% of the reduced OMV at low business mileage, falling to 6% above 48,000 business km. A plug-in hybrid is not an electric car for this tax: it is taxed on its CO2 like any other car, with no electric reduction.
Worked figures
A car with an OMV of €50,000, driven 20,000 business km a year, for an employee on €60,000:
| Year | Electric: taxable benefit | Electric: tax cost | Petrol, 110g CO2: tax cost |
|---|---|---|---|
| 2025 | €1,125.00 | €529.90 | €5,752.71 |
| 2026 | €3,000.00 | €1,417.01 | €5,766.23 |
| 2027 | €5,250.00 | €2,487.86 | €6,570.47 |
The tax cost is the extra income tax, USC and PRSI for the year. In 2027 the electric car still costs about €4,082.61 a year less in tax than the petrol car. But it costs €1,070.85 more than it did in 2026.
Charging
- A charge point at work, available to all staff, is not a benefit, including for hybrids.
- Since 2025, a charge point your employer installs at your home and still owns is not a taxed benefit. This applies if you have the private use of its fully electric car. It does not apply to hybrids.
If you are choosing a car
Because the reduction is fixed, the cheaper the car, the larger the share of its value that escapes tax. If your employer lets you pay towards running costs, each euro you pay directly to them comes off the taxable benefit.
Work it out
Sources
- Revenue: Private use of employer provided vehicles: how to calculate the taxable benefit (checked 25/10/2026)
- Revenue: Private use of employer provided vehicles: exemptions and reductions (checked 25/10/2026)
- Revenue: Tax and Duty Manual Part 05-01-01b: Benefit in kind on the provision of vehicles (checked 25/10/2026)
- Department of Finance: Budget 2027: Tax Policy Changes (checked 25/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.