Yesterday, the ACT Government released its 2025-26 Budget, which focused on ‘Investing in our growing city and delivering for Canberra’.
A key announcement in this budget is the introduction of a new duty rate for vehicles over $80,000. The AADA considers this to be an unprecedented tax grab on new car buyers, which will essentially see the duties collected on cars practically double over the next four years. The AADA has issued a public statement criticising the change.
In the Budget, the Government made a number of announcements related to motor vehicle duties, concessions and taxes.
Duty on Motor Vehicle Registrations and Transfers
From 1 September 2025, the complete concession for motor vehicle duty for zero-emission vehicles will be replaced with a minimum duty of 2.5 per cent and increasing duty rates proportionally based on emissions and vehicle value.
A new tax rate of eight per cent for motor vehicle duty will now apply to the value of vehicles above $80,000, creating a new duty bracket. Previously, duty rates applied to vehicle values below and above $45,000 only.
Motor Vehicle Registration Fees
From 1 July 2024, the ACT vehicle registration system transitioned from a weight-based model to an emissions-based model.
From 1 July 2025, registration fees will be indexed to reflect the ongoing shift to a more efficient vehicle fleet. The Government qualified this announcement by stating that no private vehicle will see a change greater than $50 per year, and no business vehicle more than $75.
Other Car Related Fees
A fee for a full five-year driver’s licence for a licence period commencing on or after 1 July 2025 will increase from $227.70 to $261.70.
As part of previous budgets, 100 per cent registration concessions have expanded to ACT Service Access Card holders and Services Australia Low-Income Health Care Card holders.
Payroll Tax
The Government will reduce the payroll tax-free threshold from $2 million to $1.75 million for national wages and adjust tax rates, from 1 July 2026.
- Firms with national wages between $1.75 million and $20 million will be taxed at 6.75 per cent, lower than the current tax rate of 6.85 per cent.
- Firms with national wages between $20 million and $50 million will be taxed at the current rate of 6.85 per cent.
- Firms with national wages between $50 million and $100 million will be taxed at 7.25 per cent.
- Firms with national wages above $100 million will be taxed at 7.75 per cent.
Property Related Taxes and Fees
In 2025-26, average general rates in the ACT will increase by 3.75 per cent for residential and commercial properties and 3.25 per cent for rural properties, along with the introduction of a new land value threshold for non-units with an average unimproved value of over $1 million.
In addition, the Government is introducing a temporary Health Levy from 2025-26. This levy will be $250 per year, collected along with other levies through rates bills, and will apply for the next four years.
Electric Vehicle TAFE Centre of Excellence
The Government will continue its support to establish a TAFE Centre of Excellence for electric vehicles located at Canberra Institute of Technology’s (CIT) Fyshwick campus, through a $16 million commitment to invest in building upgrades to deliver an EV training lab and specialised equipment.
Extending the Sustainable Household Scheme
The Government will extend the Sustainable Household Scheme by providing $75 million in low-interest loans for battery storage, zero emissions vehicles and chargers, ceiling insulation and energy efficient electric appliances. A 3 per cent interest rate will be applied to all loans written from 1 July 2025 (excluding Home Energy Support and Owners Corporation Program loans).
Continuing the Zero Emissions Vehicle Strategy
The Government will continue to deliver a range of actions under the ACT’s Zero Emissions Vehicles Strategy 2022-30 to promote the uptake of electric vehicles across the ACT including further rollout of charging infrastructure for the Government’s commercial EV fleet and investigating the feasibility of Direct Current fast charging hubs across the ACT.