NEV Purchase Tax to Resume in 2026 with 5% Rate and 15,000 Yuan Cap

Published: Sep 12, 2025 11:05

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[Tax on NEV Purchases to Be Reinstated in 2026, with a Minimum 5% Vehicle Purchase Tax] 2025 marks the final year of China's vehicle purchase tax exemption policy for new energy vehicles, with taxation to resume next year, albeit with continued incentives. According to the "Announcement on Extending and Optimizing the Policy for Reducing and Exempting Vehicle Purchase Tax on New Energy Vehicles" issued by the Ministry of Finance and other authorities in 2023, NEVs purchased between January 1, 2026, and December 31, 2027, will be subject to a 50% reduction in vehicle purchase tax, with the tax reduction for each passenger NEV not exceeding 15,000 yuan. This means that individuals and entities purchasing NEVs in 2026 and 2027 will resume paying vehicle purchase tax but will still enjoy a 50% tax reduction. The current vehicle purchase tax rate is 10%, so a 50% reduction for NEVs implies an effective tax rate of 5%. However, to prevent high-end luxury NEVs from consuming excessive vehicle purchase tax incentives, the Announcement sets a maximum limit on the tax reduction for NEVs over the next two years, capping the tax reduction per vehicle at 15,000 yuan.

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