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Summary of 2026 BIK changes
Changes to Benefit in Kind (BIK) on employer-provided company cars came into effect from 1 January 2026 and are summarised below.
A new CO₂ category A1 has been introduced for cars (including vans) with zero CO₂ emissions from 1 January 2026.
Updated BIK rates from 1 January 2026
See below the updated table of BIK rates based on business mileage incurred, including the new A1 category in respect of cars.
Business Mileage | Vehicle Categories | |||||||
(1) | Upper Limit (2) | A1 | A | B | C | D | E | |
Kilometres | Kilometres | Per cent | Per cent | Per cent | Per cent | Per cent | Per cent | |
- | 26,000 | 15 | 22.5 | 26.25 | 30 | 33.75 | 37.5 | |
26,001 | 39,000 | 12 | 18 | 21 | 24 | 27 | 30 | |
39,001 | 48,000 | 9 | 13.5 | 15.75 | 18 | 20.25 | 22.5 | |
48,001 | - | 6 | 9 | 10.5 | 12 | 13.5 | 15 | |
CO₂ emission categories A1–E
The level of CO₂ emission that determines the above categories A1 to E is as follows:
Vehicle Category (1) | CO₂ Emissions |
A1 | 0g/km |
A | More than 0g/km up to and including 59g/km |
B | More than 59g/km up to and including 99g/km |
C | More than 99g/km up to and including 139g/km |
D | More than 139g/km up to and including 179g/km |
E | More than 179g/km |
It is also worth noting the lower limit of the highest mileage band has been permanently reduced to 48,001 kilometres, effective from 1 January 2026.
OMV reductions extended to 2028
There is also a further extension to the temporary reduction of €10,000 applied to the original market value (OMV) used in calculating BIK. This reduction for all cars from categories A1-D (including vans) has been extended to 2026, and will apply on a tapered basis in 2027 and 2028. The reduction in original market value for fully electric vehicles is at a higher level. The table below summarises the reductions to be applied in each year.
| Year of assessment | All cars in categories A1**, A, B, C and D (including electric cars) | All cars in category E | All vans (including electric vans) | Electric vehicles |
| 2023 | €10,000 | 0 | €10,000 | €45,000 |
| 2024 | €10,000 | 0 | €10,000 | €45,000 |
| 2025 | €10,000 | 0 | €10,000 | €45,000 |
| 2026 | €10,000 | 0 | €10,000 | €30,000 |
| 2027 | €5,000 | 0 | €5,000 | €15,000 |
| 2028 | €2,500 | 0 | €2,500 | €2,500 |
Additional notes
There are various nuances to the calculation of BIK on both company cars and company vans, and it is an area where we often see underpayment of tax arise.
The confirmation of BIK changes maintains reduced BIK on company cars for the next three years, albeit on a sliding scale. This maintains lower tax on company cars for employees and for employers through the employer PRSI cost. This represents a positive outcome following the recent updates and appears to encourage the adoption of electric vehicles.
Contact us
Please contact our private client team should you have any queries regarding any aspect of BIK or the taxation of pay and benefits generally.
