Navigating 2026 BIK Changes on Electric Vehicles

Navigating 2026 BIK Changes on Electric Vehicles

Benefit-in-Kind (BIK) has become one of the biggest factors influencing company car decisions in Ireland, and with Budget 2026, there are important updates that fleet managers and drivers need to understand. While electric vehicles continue to receive favourable treatment, the structure of the incentives is beginning to evolve.

Since 2023, BIK has been calculated using three key factors: the vehicle’s Original Market Value (OMV), annual business mileage, and CO₂ emissions. From 2026, fully electric vehicles will move into their own dedicated emissions band  (Category A1) placing them in the lowest possible emissions category. In practical terms, that means EVs continue to benefit from the most favourable BIK rates available.

The main change for 2026 relates to the OMV relief for electric vehicles. From 2023 to 2025, EVs benefited from a €35,000 reduction in OMV when calculating BIK. From 2026, this relief reduces to €20,000, before tapering again to €10,000 in 2027. Although the relief is decreasing, €20,000 still represents a significant tax advantage compared to petrol or diesel vehicles, which receive no such reduction.

To illustrate the impact, imagine two vehicles with an OMV of €50,000, one electric and one petrol. The electric vehicle benefits from the €20,000 OMV relief, reducing its taxable value to €30,000, and sits in the lowest emissions band. The petrol vehicle remains taxable on the full €50,000 and falls into a higher CO₂ category. The result is a substantial difference in annual BIK liability , often amounting to several thousand euro per year in taxable benefit. For higher-rate taxpayers, this translates into a meaningful difference in take home pay.

It’s also worth noting that commercial vehicle BIK remains unchanged at 8% for 2026, providing stability for businesses operating vans and light commercial fleets.

In addition, the home charger exemption introduced under the Finance Act 2024 continues to apply. Where an employer installs a charger at an employee’s home for a fully electric company vehicle, no BIK liability arises. This further supports the shift towards electric and reduces the overall cost of transition.

While incentives are gradually tapering, electric vehicles remain a highly tax efficient option for company car drivers in 2026. Now is the ideal time for businesses to review their fleet strategy, model driver tax exposure and plan ahead.

At Kearys Leasing, we’ve developed a simple BIK calculator to help businesses assess the 2026 changes across different vehicles and mileage bands. If you’d like a complimentary copy and advice on your EV transition strategy, our team would be happy to assist.

(Please note: The Kearys Leasing BIK calculator is an estimation tool only. For precise BIK figures, please consult Revenue or your company accountant.)