Gas Prices Rise in Ireland – Electric Vehicle Costs Unchanged
Ireland’s 2026 Budget: Carbon Tax Increase Offset by EV Incentives
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Carbon Tax to Rise, Fuel Costs to Increase
Motorists in Ireland will face higher fuel costs following an increase in the carbon tax, but owners of low-emission and electric vehicles will benefit from extended tax reliefs. The carbon tax rate per tonne of carbon dioxide emitted will rise from €63.50 to €71 for all propellant fuels, effective midnight. This increase will add approximately €1.28 to the cost of filling a 60-litre petrol tank and €1.48 to a diesel tank, according to reporting by the Irish Times.
Relief for Electric Vehicle Owners
Despite the fuel tax increase, the 9% VAT rate on electricity will be maintained until the end of 2030, preventing a rise to 13.5% for electric vehicle charging. This measure aims to encourage the adoption of electric vehicles. Additionally,the €5,000 Vehicle Registration Tax (VRT) relief for electric vehicles has been extended to the end of 2026.
Changes to Benefit-in-Kind (BIK) for Company Cars
The Minister for Finance, Paschal donohoe, introduced a new A1 category for Benefit-in-Kind (BIK) taxation on company cars, specifically for zero-emission vehicles. This new category offers reduced BIK rates ranging from 6% to 15%, depending on the business mileage driven. The existing €10,000 relief on BIK for cars wiht CO2 emissions below 180g/km and all vans has also been extended until the end of 2028. the highest mileage band for BIK calculations has been permanently set at 48,001km, starting in 2026.