In line with the Ministry of Finance’s previous announcement, the Israel Tax Authority officially announced today that the purchase tax rate on electric vehicles will be 45% as of January instead of the current rate of 35%. At the same time, the maximum limit to which the tax benefit will be applied (the full rate of purchase tax on gasoline-powered vehicles is 83%) will be reduced to NIS 35,000, instead of the current NIS 50,000.
This means that the effective tax rate on some electric cars, especially the more expensive ones, will be much higher than the official rate of 45%. The tax authority’s announcement stated: “Under the law, it was supposed to cancel the tax advantage on electric vehicles in 2025, so that an 83% purchase tax would be applied to electric vehicles, with the shekel reduced as part of the “green tax” advantage. This matter aims to Prevent the abolition of the benefit, and continue the reduced tax system for electric cars.
Besides the adjustment to the purchase tax on electric vehicles, all petrol, diesel, plug-in hybrid and plug-in hybrid vehicles will become more expensive due to a separate move to lower the ceiling on the ‘green tax’ benefit given to vehicles on their terms. Pollution levels. In November, it was reported that the allowance, currently capped at NIS 18,400, would be reduced by up to NIS 4,000, depending on the vehicle’s pollution level. But in the end, it was decided to reduce the ceiling by an additional 750 shekels, or up to 4,750 shekels in total, in order to finance the purchase tax allocations for electric cars.
There are two exceptions to this provision. The first is electric cars, which will continue to receive the full “green tax” allowance of NIS 18,400 until the end of 2027. The second is vehicles with pollution levels 14 and 15. So far, these vehicles have not received any beneficial green taxes, but from now on they will be subject to a graduated “green fine”, according to their level of pollution. The fine ranges from 1,700 shekels to more than 7,000 shekels for the most polluting vehicles. High-polluting vehicles to which the “green fine” will be applied include popular petrol and diesel SUV models, minibuses and most light commercial vehicles.
The result is that many models will become thousands, even tens of thousands, of shekels more expensive in 2025.
Published by Globes, Israel Business News – en.globes.co.il – on December 12, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.
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