The Budget Just Shifted Gears — Did Your Fleet?

The government just dropped a gear and now every fleet in Australia is feeling hit with a G-force of change. The 2026 budget didn’t just tweak a few controls, it rewired the rules for Electric Vehicles (EV) Incentives, fleet costs and the way YOUR business needs to plan its next vehicle refresh. If your fleet staff weren’t paying attention, they may have taken the wrong turn!!

Currently (this article being written in May 2026, just after the 2026 Australian Labor Party Budget was announced), there is a 100% FBT exemption on eligible EVs provided to employees as a company car or novated lease. The applies to BEVs (Battery Electric Vehicles) and Hydrogen fuel-cell vehicles, and its covers the vehicle value and all running costs, including rego, insurance, charging and maintenance.

Obviously, there are a few key eligibility factors, such as it must have been first used on or after 1st July 2022, it must be below the LCT (Luxury Car Tax) threshold ($91,387 in 2025-26) and it must be classed as a passenger car, being less than a tonne, and have less than 9 seats.

Why is this important? Well, it eliminates a 47% FBT liability which represents a huge cost advantage versus ICE (Internal Combustion Engine) vehicles. Also, it makes EVs the cheapest vehicle types to salary package. This is by far the best incentive to adopt EVs into fleets in Australia at the moment.

…but let’s not run out to Jaycar and buy a bunch of extension leads just yet.

The 2026 Budget presented by Treasurer Jim Chalmers may have thrown a big handbrake turn on some of these benefits… not that a handbrake turn from an EV would be that impressive anyway… but this can affect the Fleet departments wanting to drive the ‘electric’ message in their fleets.

From April 2027, less than 12 months away, cheaper EVs, those under $75,000, will get that full FBT exception, whilst the mid-range ($75,000 to $91,000) will only get a partial tax discount and the expensive, more luxury EVs will get NO real tax benefit. The benefit doesn’t completely disappear, but it reduces, especially for the higher priced ones.

Looking into the future, April 2029, that full exemption with completely go and will be replaced with just a 25% discount on FBT. EVs will still have that slight advantage over ICE vehicles, but the real big advantage will be gone.

So, you may ask yourself as a responsible fleet executive, what does that mean to me?

Quite simply, if you want to start transitioning your fleet into a more EV heavy stock, the time to do it is before 31st March 2027, because after that, those savings will reduce. Even if leased, vehicles will keep the full benefit of the lease after the changes kick in.

This has occurred because EVs are becoming more mainstream. Even though the cars haven’t hit 10% of the total amount of cars in Australia yet (going by figures from 2024), this pressure to take advantage of the current state of FBT and other incentives is going to really push that figure. There is an estimation that EVs will hit 30% of all new car sales in 2030, and if this deadline pushes sales, the vehicles will be less of a novelty and more of a regular choice for any car buyers.

Maybe we shall see Revheads replaced by EVheads?

EVs were great for those wanting to have a position of reducing one’s environmental footprint, and for the next few months it makes better financial sense.

The good news is this isn’t a handbrake turn — it’s a gear change.

EV support isn’t vanishing overnight, but the Budget confirms the market is moving from “full boost” to a more measured pace over time.

For fleets, that means the winning approach looks familiar: buy/lease within the rules, keep the paperwork tidy, and avoid surprises at audit time — the same way you’d service a vehicle properly to avoid a roadside breakdown later. Of course, using AusFleet to keep these records perfect is your best answer.

In other words: keep your hands on the wheel, eyes on the dash, and plan your next few years like you’re managing total cost of ownership — because that’s exactly what this is!

'this article should not be considered financial advice'