Company Car Tax Guide 2026
Everything you need to know about Benefit-in-Kind changes in effect for the year ahead.
Changes to the Benefit-in-Kind (BIK) tax for company cars came into effect in Ireland from January 1, 2026, and it has brought about noticeable differences for those affected.
There’s a new, dedicated band for pure zero-emission electric vehicles (EVs), while rates increase for those doing fewer kilometres in more polluting combustion-powered cars.
What’s the new BIK band?
It’s called A1 and it’s purely for EVs, as only cars with a 0g/km CO2 emissions rating can qualify for this. Previously, EVs were bundled in with low-emissions plug-in hybrids (PHEVs), but those cars now tend to sit on their own in Band A (more than 0g/km up to and including 59g/km).
After that, there’s Band B (60-99g/km), Band C (100-139g/km), Band D (140-179g/km) and then Band E (more than 179g/km).
What has happened to the mileage rates?
The 2026 BIK rules still favour those who do more kilometres per year for work, as they gain lower tax rates. The main change is that the lower limit of the highest mileage band has decreased, from 50,001km per annum previously to 48,001km annually now.
For drivers doing up to 26,000km a year for work, the BIK rates for the CO2 bandings are as follows: 15% for A1; 22.5% for A; 26.25% for B; 30% for C; 33.75% for D; and the highest rate of 37.5% for E.
The next mileage level, of 26,001-39,000km, results in: 12% for A1; 18% for A; 21% for B; 24% for C; 27% for D; and 30% for E.
Stepping up to 39,001-48,000km elicits: 9% for A1; 13.5% for A; 15.75% for B; 18% for C; 20.25% for D; and 22.5% for E.
And finally, anyone doing 48,001km or more for work will be taxed: 6% for A1; 9% for A; 10.5% for B; 12% for C; 13.5% for D; and 15% for E.
| Mileage (Work km per year) | A1 (0g/km) | A | B | C | D | E |
|---|---|---|---|---|---|---|
| Up to 26,000km | 15% | 22.5% | 26.25% | 30% | 33.75% | 37.5% |
| 26,001 – 39,000km | 12% | 18% | 21% | 24% | 27% | 30% |
| 39,001 – 48,000km | 9% | 13.5% | 15.75% | 18% | 20.25% | 22.5% |
| 48,001km or more | 6% | 9% | 10.5% | 12% | 13.5% | 15% |
Does this apply for vans as much as cars?
No, vans still have a BIK rate of 8% across the board.
Has anything else changed that could alter my tax requirements?
The original market value (OMV) figures which you use to calculate your tax outlay in the first place feature some reductions.
The OMV is described as the price a vehicle could reasonably be expected to sell for if it were put on the market before its first registration.
There is a €10,000 reduction to the OMV (including all cars and vans) in Bands A1-D, but this will only remain in place until December 31, 2026. It will then continue on a tapering basis until 2028, with a €5,000 OMV reduction in 2027 and a €2,500 reduction in 2028. This OMV figure does not apply to any vehicles in Band E.
An additional OMV reduction applies to any vehicles in the newly created Band 1, i.e., EVs. This is set at €20,000 in 2026 and €10,000 in 2027. As a result, any employee using an EV for work in 2026 will benefit from an overall €30,000 OMV reduction in 2026, made up of the €20,000 vehicle-specific figure and also the universal reduction of €10,000 for all vehicles except those in Band E.
Thus, if your EV has an OMV of €60,000, the cash equivalent for the vehicle will be €30,000 in 2026. If you then drive 38,000km for work, you would qualify for 12% BIK and so would be subject to BIK notional pay of €3,600 (€30,000 x 12%).