Company Car BIK Ireland 2026: Rates, Bands & EV Savings

Benefit-in-Kind (BIK) is the tax charge on the value of a company car you or an employee can use privately, not just for work. Revenue treats free private use of the car as a form of pay. Your employer calculates a "cash equivalent" — the car’s Original Market Value (OMV) multiplied by a percentage set by its emissions category and your annual business mileage — and adds that figure to your gross pay. It’s then taxed through payroll like any other income, via Income Tax, PRSI and USC.

From 1 January 2026, Revenue’s Table A sets the BIK percentage by vehicle category (A1 for electric cars, then A to E by rising CO2 emissions) and annual business kilometres. Category A1 electric cars run from 15% (under 26,000 km) down to 6% (over 48,001 km). The highest-emitting Category E cars run from 37.5% down to 15% over the same bands. The lower mileage limit for the top 48,001km+ band is now permanent — it will not keep rising in future years.

Yes — the 0% BIK exemption for electric company cars ended after 2023. Electric vehicles now sit in their own Category A1, which carries the lowest BIK percentages of any category (6–15% versus up to 37.5% for the dirtiest petrol/diesel cars), plus a much larger OMV reduction. So EVs are taxed, but still by far the cheapest company car option.

Electric company cars (Category A1) get two reductions stacked together in 2026: a €20,000 EV-specific reduction to the car’s Original Market Value, plus the general €10,000 reduction that also applies to Categories A–D. That’s up to €30,000 off the OMV before the BIK percentage is even applied — on a €50,000 electric car, BIK is calculated on just €20,000. Category E cars (the highest emitters) get no OMV reduction at all.

No — both parts are due to taper. Revenue confirms the general €10,000 reduction (Categories A1–D) steps down to €5,000 in 2027 and €2,500 in 2028. The EV-specific €20,000 top-up is confirmed for 2026 and is also expected to reduce in later years, so an electric company car’s BIK saving is largest right now and will narrow over the next two years — a real reason to move sooner rather than later if you’re choosing between an EV and a combustion car.

The BIK cash equivalent isn’t a tax bill on its own — it’s added to your gross pay and taxed at your normal rate through payroll. A higher-rate taxpayer pays roughly 52% combined (40% Income Tax + top-rate USC + 4% PRSI) on that added amount; a standard-rate taxpayer pays significantly less, roughly 28–30%. Using Revenue’s own worked example — a €50,000 electric car, 35,000 business km, Category A1 at 12% — the cash equivalent is €2,400/year, which costs a higher-rate taxpayer in the region of €1,200–1,250 extra tax for the year, not the full €2,400.

Business mileage is kilometres driven for work purposes — client visits, site travel, work-related journeys — logged and agreed with your employer, not your commute. Genuinely higher business mileage moves you into a lower-percentage band on Table A, which lowers your BIK. You cannot inflate mileage to game the system — Revenue can request mileage records, and misstating them is tax fraud — but if your job genuinely involves a lot of driving, keeping an accurate log matters for your tax bill.

It depends entirely on the car and your mileage. A low-emission or electric company car in Category A1 with high business mileage can be one of the most tax-efficient benefits an employer can offer, especially while the 2026 OMV reductions are at their peak. A high-OMV Category D or E petrol/diesel car with low business mileage is usually the worst-value option — you’d often be better off with a cash allowance and buying privately. Run the numbers for your specific car and mileage before assuming either option is better.