Budget 2026: What Changed for Motorists?

The Minister for Finance has delivered Budget 2026, and once again, the focus is firmly on environmental taxation. Here are the key takeaways affecting Vehicle Registration Tax (VRT), motor tax, and fuel costs.

1. Carbon Tax Increase

As expected, the Carbon Tax has increased by another €7.50 per tonne. This translates directly to higher prices at the pump:

• Petrol: +2.1 cent per litre
• Diesel: +2.5 cent per litre

This increase takes effect from midnight regarding auto fuels, marking another step in the government's plan to reach €100 per tonne by 2030.

2. VRT Rate Bands Held Firm

In a surprising move, the core 20-band VRT table remains largely unchanged from 2025. The government seems satisfied that the current rates (ranging from 7% to 41%) are effectively incentivizing lower-emission vehicles.

"Stability in the VRT bands allows the motor industry to plan inventory, but the pressure is now on manufacturers to lower WLTP emissions further."

3. Benefit-in-Kind (BIK) Adjustments

For company car drivers, the temporary €10,000 reduction in the OMSP (Original Market Value) for BIK purposes has been extended for another year. This is a significant relief for those driving electric company cars.

• EV Drivers: Continue to benefit from the 0% BIK rate on the first €35,000 of OMSP.
• High Mileage: Tapering relief remains crucial for sales reps and high-mileage drivers.

4. Electric Vehicle Grants

While VRT relief continues, the SEAI purchase grant is being closely monitored. The budget confirmed that the €3,500 maximum grant will remain in place for the first half of 2026, but hinted at a gradual reduction as price parity with ICE vehicles improves.

5. Used Imports & Brexit

No changes were announced to the Customs Duty regime. The 10% duty on GB imports remains, as does the obligation to pay VAT at 23%. This continues to make UK imports less attractive unless the vehicle is VAT-qualifying or Northern Ireland registered.

Summary Table: 2026 Changes