Before you begin
What decides the tax on a company car
Your employer adds a percentage of the car's original market value to your pay, and you pay Income Tax, USC and PRSI on it. The percentage depends on the car's CO2 emissions and your business kilometres, and the value is cut by reductions Revenue has already fixed for 2026 to 2028. This compares one electric car with one petrol, diesel or hybrid car and works out the extra tax each causes on top of your pay. Your employer's costs are not included.
Use the original market value, not what the car cost your employer or what it is worth now.
For the other car, use its CO2 figure: that alone decides its category, and the category decides its percentage.
Enter the business kilometres you expect to drive in a normal year.
Reading the answer
Reading the benefit and the yearly tax
The saving is the other car's tax less the EV's, so a negative figure means the EV costs you more in tax.
The EV's tax rises each year because the reductions Revenue allows fall, and the electric-car relief ends after 2027. Compare the three years, not only the first.
The tax is on top of your pay, so it depends on which tax bands the benefit lands in.
Boundaries
Assumptions and limitations
Working assumptions
- Income Tax and USC are worked at 2026 rates and bands for all three years, because nothing later is published.
- Your tax credits are fully used by your pay, and no reduced USC rate applies. PRSI is charged on the whole benefit at 4.35%, the rate from 1 October 2026, in all three years. Payroll charges 4.2% before that date, and a further rise is already scheduled for October 2027, so the real figure is a few euro lower in 2026 and a little higher after.
- The first car is fully electric and emits 0 g/km. A hybrid is not electric, so enter it as the other car.
Where to be careful
- Your employer's own costs and PRSI on the benefit are not counted.
- Electricity your employer reimburses for charging the EV at home is tax-free where it is documented, and is not counted.
- A lump sum you pay towards the purchase, a car available for only part of the year and company vans are not covered.
Worked example
The same question, answered end to end
An employee on €60,000 comparing a €50,000 electric car with a €45,000 petrol car that emits 130 g/km, with 20,000 business kilometres a year.
What was entered
- Electric car with an original market value of €50,000; other car at €45,000 and 130 g/km, which is category C.
- 20,000 business kilometres a year, no contribution to the employer.
- Pay of €60,000 and a €44,000 standard rate band, so the benefit is taxed at 40%.
How it is worked out
2026 electric car: €50,000 less the €10,000 general reduction and the €20,000 electric-car relief leaves €20,000, and 15% of that is a €3,000 benefit.
2026 other car: €45,000 less the €10,000 general reduction leaves €35,000, and 30% of that is a €10,500 benefit.
Each benefit is added on top of €60,000 of pay, so it is charged at 40% Income Tax, the USC bands it falls in and PRSI.
In 2027 the reductions halve and in 2028 the electric-car relief ends, so the EV's benefit and tax rise each year.
What the tool returns
- EV tax saving in 2026
- €3,574
- EV tax saving in 2027
- €3,294
- EV tax saving in 2028
- €2,799
- EV benefit added to your pay in 2026
- €3,000
Common questions
Questions about this tool
Why does the EV's tax rise in 2027 and 2028?
Revenue takes a fixed amount off a car's original market value before applying the percentage. That amount falls each year for every car, and the extra relief for electric cars ends after 2027, so the same EV has more value left to tax.
Does a plug-in hybrid count as electric?
No. Revenue counts only cars driven by electricity alone. Enter a hybrid in the other-car field with its CO2 figure, and it is placed in a category by that figure.
Is this the tax my employer pays?
No. It is the extra tax you pay because the benefit is added to your pay. Your employer's own costs, including PRSI on the benefit, are separate and not counted.