Budget 2026: Extension to VRT relief, petrol and diesel prices to rise

Budget 2026 was announced this afternoon by Government Ministers. Here is what it means for motorists and the industry:

Extension to VRT relief for EVs
The €5,000 VRT relief for electric vehicles has been extended for an extra year, now expiring on 31st December 2026.

The extension of the Benefit in Kind (BIK) tax relief for company cars aims to support both businesses and their employees to upgrade their vehicles to the latest, most efficient vehicles.

Petrol and diesel to rise 2.5 cent per litre
From midnight tonight, petrol and diesel prices will rise by 2.5 cent per litre due to an increase in carbon tax.

From 1st January 2026, changes to the renewable transport fuels obligation scheme is expected to add another two to three cents per litre.

No vehicle weight-based tax
Budget 2026 did not include a vehicle weight-based tax for cars and SUVs – similar to that already active in France – which had been proposed back in July by the Department of Finance’s Tax Strategy Group.

“Extremely disappointing” – SIMI
The Society of the Irish Motor Industry (SIMI) has expressed its disappointed at the lack of further support the electric vehicle market received in Budget 2026.

“While the Government has extended VRT relief on electric vehicles for another year, it is extremely disappointing that they did not do more to support the electric vehicle market,” said Brian Cooke, director general SIMI.

“In particular, the changes to the Benefit in Kind (BIK) relief will mean a tax increase for many EV company drivers next year. EVs are still an emerging market, and in this context, we feel the 2025 thresholds could have been extended beyond the end of this year.”