In line with a previous announcement by the Ministry of Finance, the Israeli Tax Authority officially announced on Thursday that the purchase tax rate for electric vehicles will be 45% from January, instead of the current 35%. At the same time, the upper limit for which tax incentives apply (the full purchase tax for gasoline-fueled vehicles is 83%) will be lowered from the current NIS 50,000 to NIS 35,000.
This means that the effective tax rate for some electric cars, especially the more expensive ones, will be much higher than the official 45%. A statement from the tax authorities said: “According to the law, the tax incentives for electric cars are to be withdrawn in 2025, and electric cars will be subject to an 83% purchase tax, within the framework of which shekels will be withdrawn. It will be lowered.” The order aims to prevent the abolition of “green tax” benefits and continue tax breaks for electric vehicles. ”
Some other vehicles will be more expensive
In addition to the electric vehicle purchase tax adjustment, all petrol, diesel, hybrid and plug-in hybrid vehicles will be subject to vehicle purchase tax in a separate move that lowers the cap on the 'green tax' that vehicles are entitled to. Depending on the price, it will be more expensive. pollution level.
In November, it was reported that the benefit, which currently has a cap of NIS 18,400, would be reduced by up to NIS 4,000 depending on the pollution level of the vehicle. However, in the end, it was decided to further reduce the cap by 750 NIS, or a total of up to 4,750 NIS, to finance the purchase tax incentives for electric vehicles.
There are two exceptions to this provision. The first is electric cars, which will receive the full benefit of the NIS 18,400 “green tax” until the end of 2027. The second is cars with pollution levels 14 and 15. Until now, such vehicles were not subject to green taxation. Although they will still receive benefits, they will now be subject to tiered “green fines” depending on pollution levels.
Fines range from NIS 1,700 to more than NIS 7,000 for the most polluting vehicles. Among the highly polluting vehicles that are subject to “green fines” are SUV models from the popular gasoline and diesel families, minivans, and most light commercial vehicles.
As a result, many models will be thousands or even tens of thousands of shekels more expensive by 2025.
