EV Discount Policy: what changes in 2027?
Why now is a smart time to switch to an electric vehicle
Thinking about an electric vehicle (EV) but worried the tax savings are about to disappear? Here is an up to date summary.
Key takeaway: The Australian Government has confirmed that the EV Discount Policy will stay the same until 1 April 2027. There are changes proposed after that.
If you already have an eligible* EV on a novated lease, or you start one before 1 April 2027, your lease is protected under the Governments proposed "grandfathering" approach.
Combined with fuel‑cost pressures, this makes now one of the best windows to switch to an EV through a novated lease.
At Smart, we’re helping Australians understand what the changes mean – and how to make the most of the savings while they’re still available.
What is the EV Discount Policy?
The EV Discount Policy is a Government incentive designed to make eligible electric vehicles more affordable.
What counts as an eligible EV? Any fully electric vehicle purchased through a novated lease up to the Luxury Car Tax (LCT) threshold ($91,387 in FY 2025-26)*.
This has been one of the most powerful incentives driving EV uptake in Australia, particularly for everyday employees using novated leasing to reduce their cost of living.
With a novated lease, there are no large upfront costs. And thanks to the EV Discount Policy, you may find that you could drive a premium EV for less than the fortnightly cost of a mid-range petrol car.
What changes has the Government announced?
Following the Government’s review of the Electric Car Discount Policy, the Government has announced a phased continuation of the policy which will be taken to Parliament to be legislated.
What stays the same (for now)
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No changes up to and including 31 March 2027
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Eligible electric vehicles remain fully-FBT exempt under the current rules
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Novated leases established on or before 31 March 2027 are grandfathered, meaning they’re not affected by the proposed future changes
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Import tariffs on eligible EVs remain removed
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No GST on the purchase price^
What will change over time
The Government has outlined a phased approach from 1 April 2027.
- Phase 1: 1 April 2027 – 31 March 2029:
- Eligible EVs priced at $75,000 or less remain fully FBT‑exempt
- Eligible EVs priced at above $75,000 but below the Luxury Car Tax (LCT) threshold receive a 25% FBT discount
- Phase 2: From 1 April 2029:
- Eligible EVs below the LCT receive a permanent a 25% FBT
These changes are designed to keep EVs affordable, sustainable and widely available – and means novated leasing remains one of the best ways to own an EV.
Is this definitely happening?
The Government has made it very clear this is their intention. However, the announced changes still need to be legislated in Parliament. We will keep you updated on any changes.
Why getting an EV through a novated lease still delivers huge value
Right now, combining an eligible EV with a Smart novated lease could mean:
- No FBT under current rules
- Lease and running costs, such as insurance and registration, paid from pre‑tax salary
- No GST on the purchase price and other potential GST savings^ on the vehicle
According to the Government’s review, a fully electric vehicle can save drivers around $26,500 in fuel costs over its lifetime, even before recent fuel‑price spikes.
The lifetime saving of $26,500 was based on the fuel price in December 2025 (around $1.90 per litre).
Petrol prices are rising. EVs could help you escape the cycle
Australia remains heavily exposed to global fuel markets, and recent international disruptions have once again pushed petrol prices higher and made fuel costs unpredictable.
EV drivers avoid much of this uncertainty:
- Electricity is generally currently cheaper than petrol per kilometre
- No price shocks at the bowser
For many households, switching to an EV is becoming a cost‑of‑living decision, not just an environmental one.
Check out our Smart Petrol Price Report to understand more about what you could save.
Why acting now matters
Because novated leases are locked in when they start, acting now could mean:
- You can access the most generous EV tax settings available
- The savings are protected for the life of your lease
The Government has confirmed that existing leases will be grandfathered, providing certainty.
See your potential savings with Smart’s novated leasing calculator
Every salary and situation is different. The easiest way to understand how the Electric Car Discount could work for you is to run the numbers.
Use Smart’s novated leasing calculator to:
- Compare a novated lease for an EV vs petrol car
- See estimated weekly repayments
- Understand your potential tax savings
Smart handles the setup, admin and ongoing management – so you can focus on driving away smarter.
Frequently asked questions
Important Information
This is general information only. Before entering into any salary packaging or novated leasing arrangement, you should consider your objectives, financial situation and needs, and seek appropriate legal, financial or other professional advice based upon your own particular circumstances. The availability of benefits is determined by your employer. Conditions and fees apply. Smartsalary Pty Ltd, ABN 24 096 796 100, a Smart™ company
*See the Australian Taxation Office website for full eligibility criteria
^GST is not payable on the purchase price of a vehicle financed through a novated lease (GST savings are calculated on the FBT base value of the vehicle, up to the claimable limit [$6,334 in FY 2025-26] unless exempt).