Electric vehicle (EV) owners in New South Wales are facing a new chapter in EV policy. While early EV adoption was supported with rebates and stamp duty exemptions, those benefits ended in January 2024. Starting from 1 July 2027, or earlier if EVs make up 30 per cent of all new light vehicle registrations, the NSW Government will introduce a distance-based road user charge on battery and hydrogen fuel cell electric vehicles. This change reflects a broader tax reform to ensure every vehicle contributes fairly to road funding, regardless of the fuel type.
From fuel excise replacements to legislative changes, this guide outlines what EV drivers in NSW need to know about current and future vehicle tax, including who is exempt, what the per-kilometre charge means for plug-in hybrid (PHEV) drivers, and how to financially prepare.
Key Takeaways for NSW EV Drivers
- The road user charge will begin on 1 July 2027 or earlier if EVs reach 30 per cent of new car sales in NSW, a milestone tied closely to the rise in electric vehicle adoption across NSW.
- Most financial incentives, including the $3,000 rebate and stamp duty exemption, ended on 1 January 2024.
- Battery electric and hydrogen fuel cell vehicles will pay 2.974 cents per kilometre, while plug-in hybrids will pay 2.379 cents.
- Fringe Benefits Tax exemptions still apply to battery and hydrogen EVs, but plug-in hybrids lose eligibility from April 2025.
- Odometer readings will be required annually at registration renewal or upon sale of the vehicle.
- EV owners should plan for these charges as part of their yearly ownership costs, alongside registration and insurance.
Current and Future EV Tax Arrangements in NSW
NSW is shifting its electric vehicle strategy from upfront incentives to road usage-based taxation. This change affects electric cars, plug-in hybrids, and hydrogen fuel cell vehicles as the government prepares to recover declining fuel excise revenue.
Here’s what EV drivers in the state should understand about the road tax changes and benefits that remain.
The Planned Road User Charge
Starting from 1 July 2027, or earlier if EVs reach 30 per cent of new vehicle registrations, NSW will implement a road user charge. This charge will apply to:
- Battery electric and hydrogen fuel cell vehicles: 2.974 cents per kilometre
- Plug-in hybrid electric vehicles (PHEVs): 2.379 cents per kilometre
The EV road charge will be calculated based on odometer readings submitted annually during registration renewal or when the vehicle is sold. The rate is indexed annually to the Consumer Price Index (CPI) under the Electric Vehicles (Revenue Arrangements) Act 2021 (NSW).
End of Purchase Incentives (Jan 2024)
As of 1 January 2024, the NSW Government has ended the $3,000 rebate for eligible electric vehicles. The stamp duty exemption for new EV purchases has also been removed, adding to the overall cost to charge and own an electric car at home. However, vehicles ordered before the deadline still qualify for these benefits upon delivery.
These changes mark a significant shift in EV tax policy and increase the financial responsibility for new EV owners in NSW.
Fringe Benefits Tax (FBT) Exemptions
At the federal level, FBT exemptions remain in place for battery electric and hydrogen fuel cell vehicles. These exemptions offer substantial savings for businesses and fleet owners. However, plug-in hybrid vehicles will lose their exemption from April 2025. EV drivers should factor this timeline into any purchasing or leasing decisions, especially for vehicles used in business.
Legislative and Regulatory Details
The electric vehicle road user charge in NSW is legislated under the Electric Vehicles (Revenue Arrangements) Act 2021. This law provides the framework for implementing the per-kilometre charge and outlines the rules for odometer data collection, exemptions, and compliance.
Following the High Court’s 2023 decision in Vanderstock v Victoria, which found Victoria’s similar EV tax unconstitutional, questions were raised about the legality of NSW’s approach. However, the NSW Government has indicated it is assessing the implications of that ruling and intends to ensure the scheme aligns with federal legal standards. As part of this, there is a commitment to review the structure of road charges as part of a broader national funding reform.
To comply with the upcoming tax, EV and plug-in hybrid owners in NSW will be required to submit accurate odometer readings either at the time of annual vehicle registration renewal or when the vehicle is sold or transferred. These readings will be the basis for calculating the road user charge, which ensures that all drivers contribute their fair share for road maintenance, regardless of fuel source.
How the Road User Charge Will Work
The electric vehicle road user charge in NSW will be a usage-based system, meaning drivers will pay according to how far they travel each year. The charge is calculated per kilometre driven and varies depending on the type of vehicle.
For battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs), the rate is set at 2.974 cents per kilometre. Plug-in hybrid electric vehicles (PHEVs) will be charged at 2.379 cents per kilometre, which is 80 per cent of the full rate due to their partial reliance on petrol.
Example:
If an EV driver travels 10,000 kilometres in a year, their road user charge would be:
- BEV/FCEV: 10,000 km × 2.974¢ = $297.40
- PHEV: 10,000 km × 2.379¢ = $237.90
The NSW Government will collect this charge during the annual vehicle registration renewal process. It will also apply at the time of vehicle sale or transfer, based on recorded odometer readings. This system aims to replace lost fuel excise revenue while maintaining fairness across all vehicle types.
Implications for EV Owners in NSW
The shift to a road user charge model introduces both financial and compliance changes for electric vehicle owners. While EVs remain cheaper to operate than petrol-powered vehicles, planning ahead is now more important.
Financial Planning
With the removal of rebates and stamp duty exemptions, the upfront cost of purchasing an electric vehicle has increased in NSW. Although electric vehicles still offer lower fuel and servicing costs, owners should now include the annual road user charge when estimating total running costs. Comparing EVs to petrol or plug-in hybrid vehicles requires a more thorough look at long-term expenses.
Business and Fleet Owners
Battery electric and hydrogen fuel cell vehicles still qualify for Fringe Benefits Tax exemptions, which remains a strong financial incentive for businesses. However, fleets must track odometer readings carefully and submit them during registration renewal or vehicle transfers. For plug-in hybrids, the FBT exemption will end in April 2025, which may influence vehicle selection in long-term planning.
Policy Outlook
NSW is aligning with national goals to reform road funding as fuel excise revenue continues to fall. A usage-based tax model ensures that all vehicle owners contribute based on how much they drive, regardless of fuel source. Transparency around how this revenue is used, such as investing in EV infrastructure, will be important to gain public trust.
EV Tax and Incentive Changes in NSW at a Glance
| Item | Battery/Hydrogen EV | Plug-In Hybrid EV | Status |
|---|---|---|---|
| Road User Charge (per km) | 2.974¢ | 2.379¢ | Starts 1 July 2027 or earlier |
| EV Rebate | $3,000 | Not available | Ended 1 January 2024 |
| Stamp Duty Exemption | Yes | No | Ended 1 January 2024 |
| FBT Exemption | Yes | Ends April 2025 | Varies by vehicle type |
*Note: The road user charge may begin earlier if EVs reach 30 per cent of new vehicle sales before July 2027.
What This Means for Current and Future EV Owners
The transition away from upfront EV incentives in NSW marks a significant policy shift. While drivers will now face distance-based road charges and fewer subsidies, electric vehicles remain cost-effective in the long run due to reduced fuel, maintenance, and servicing expenses. For fleet operators and individual owners alike, staying informed and budgeting for usage-based charges is now part of smart EV ownership.
If you’re planning to buy an electric vehicle or need help navigating NSW’s EV regulations, Calibre Connect is here to help. Our licensed electricians in Sydney are ready to assist with EV charger installations, upgrades, and inspections to ensure you’re road-ready and compliant.
Contact us today to schedule a consultation.