EV Incentives in Australia 2025: Everything You Need to Know
We’re seeing more and more electric vehicles (EVs) on our streets, a clear sign of the global shift towards greener transport. But let’s be honest: The upfront cost of an EV can be a bit of a shock.
That’s where government incentives come in. A bundle of incentives, rebates, and tax breaks introduced in the last few years aren’t just making EVs more accessible. In a lot of cases, they’re even more affordable than petrol vehicles.
We’ve rounded up the latest news on EV incentives in Australia to help you get the best deal on your dream car or transition your business’s fleet.
This information is current as of February 2025. We’ll do our best to update this guide as things change.
Why EV Incentives Matter
Incentives Drive EV Adoption
With government support, more individuals and businesses in Australia are able to make the switch to cleaner transport at a time when it’s never been more important to cut emissions.
And they’re really working. From 2022 to 2023, when a lot of these incentives kicked in, EV sales rose a whopping 160%. They rose again in 2024, although more mildly, posting 4.7% growth with a little over 91,000 vehicles sold.
Meanwhile, petrol vehicle sales fell 10% and diesels were down 2.5%.
They Also Apply to Other Low-Emissions Vehicles
We can’t overlook hybrids and plug-in hybrids (PHEVs). They’re often included in national and state incentives for “low and zero-emissions” vehicles, until 1st April 2025.
In 2024, hybrid vehicle sales rose 76% and PHEVs rose 100.2%. Granted, we’re talking about smaller numbers overall (23,000 PHEVs compared to 91,000 all-electric).
But the combined effect is that low and zero-emissions vehicles had a market share of 9.65% last year, up from 8.43% in 2023.
You Get Ongoing Discounts
EV incentives in Australia chip away at both the initial purchase price and ongoing running costs.
With discounts on registration, reduced luxury car tax, and cheaper running costs through novated leasing – not to mention the reduced costs of charging and servicing compared to petrol vehicles – the savings add up.
Federal Government EV Incentives and Policies
The Electric Car Discount for Novated Leases
The Electric Car Discount is one of the most valuable incentives available to individuals and employers right now. It applies to low and zero-emissions vehicles that were “first held and used” after 1 July 2022 and fell below the Luxury Car Tax (LCT) threshold at the time of first sale.
Here’s what it means for your wallet:
- Lower income tax: 100% of your payment for eligible cars on a novated lease comes from your before-tax salary, meaning you pay less income tax.
- No Fringe Benefits Tax (FBT): Eligible novated vehicles are exempt from FBT (this is why you make 100% of your payment before-tax), effectively giving you a tax discount that could reduce the cost of your next eligible EV.
- Applies to multiple vehicle types: Battery electric vehicles (BEVs), hydrogen fuel cell vehicles (HEVs), and PHEVs can all qualify – though PHEVs lose eligibility after 1 April 2025.
- Import tariff exemptions: Eligible vehicles are also exempt from import tariffs, lowering the purchase price.
What does this mean for you? Essentially, leasing an eligible EV through a novated lease could make it far more affordable than buying outright or financing through a traditional car loan.
LCT Thresholds and Additional Investments
The Australian Government’s commitment to EV adoption goes beyond the Electric Car Discount.
We mentioned the Luxury Car Tax threshold earlier. For FY 2024-25, the LCT threshold for fuel-efficient cars (BEVs, HEVs and PHEVs) has been raised to $91,387, compared to $80,567 for petrol and diesel vehicles. This makes more EVs eligible for tax discounts.
There is also increased investment in charging infrastructure through the Driving the Nation Fund, making EV ownership more practical nationwide. This collaboration between Federal and State governments will deliver 117 charging stations to connect the nation’s capital cities.
Three Ways to Maximise EV Incentives with a Novated Lease
1. Before-Tax Payments Mean More Savings
When you lease an eligible EV, 100% of your payments come from your before-tax salary. That means your assessable income could be lower, you pay less income tax, and you could take home more of your salary.
It’s a double advantage. You could save on the purchase price with access to our fleet discounts and benefit from potential tax savings through government incentives like the Electric Car Discount.
2. Purchase Price Discounts
By leasing an eligible EV, you could access several savings before you even get the keys:
- Save GST on the purchase price
- No import tax (provided it’s under the LCT)
- Access to fleet discounts (when you choose Fleetcare)
3. Bundled Running Costs
Everything from charging costs and servicing to insurance, roadside assistance, and even new tyres is included in your before -tax payment. This simplified payment makes budgeting easier, and you don’t need to worry about price shocks or regular repair costs.
The Future of EV Incentives in Australia
The EV incentives landscape is constantly evolving. We’re in an interesting spot, with some incentives due to expire while public interest, economic policy, and emissions targets all indicate a need to boost the EV market.
The Electric Vehicle Council’s Head of Policy, Legal and Advocacy, Aman Gaur, sums up the situation nicely:
“The 2024 electric vehicle sales results are encouraging, especially in a year when Australians were smashed by high interest rates and the high cost of living. It was also a year in which some states prematurely withdrew crucial incentives that would have boosted adoption further.
“It’s not just Australians’ desire to purchase an EV that’s driving the rise in sales – the increase in charging infrastructure, wider range of models at more competitive prices, and the continuation of key purchase incentives have all played a crucial role in encouraging the next wave of EV owners.”
While the Federal Government has supported adoption so far, changes like the removal of PHEVs from the Electric Car Discount in April 2025 indicate that policies may tighten in the future. It’s also an election year, so we’re not willing to predict what might happen.
What we can confidently say is that if you’re considering an EV, now is the time to take advantage of the available incentives before policies change.
Ready to Make the Switch?
If you’re ready to switch to an EV, Fleetcare makes it easy with novated leasing. Access exclusive fleet discounts, tax savings, and convenient bundled payments We’re here to help you transition to EV ownership smoothly and maximise your tax advantage.
Contact us on 134 333 or via the form below to learn more about how a novated lease can work for you.