While many cost-specific measures such as taxation and credits for motorists are a matter for my colleague the Minister for Finance, my own Department regularly seeks ways to evaluate the cost of car dependency as well as assist motorists by either reducing their overall cost of usage or, where possible, increasing their alternative options to the use of a car through the rollout of additional public and sustainable travel initiatives.
I have detailed below some examples of the work my Department has undertaken to reduce car dependency, particularly in areas where car dependency may be higher and alternative options are being put in place.
These actions include rollout of more sustainable public and sustainable travel options, promoting the use of electric vehicles with their lower total cost of ownership and for areas with fewer public transport options, the rollout of increasing LocalLink options.
I have also included some material provided by the Department of Finance below for information.
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Initiative
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Details
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Transport interchanges with sustainable mobility.
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• The best measure to offset the cost for motorists is investment in alternatives to the use of private cars. To this end, the National Sustainable Mobility Policy (SMP) commits to expanding the availability of sustainable mobility options in regional and rural areas of the country (Goal 4).
• The current SMP Action Plan 2022-2025 provided for Connecting Ireland and the significant expansion of accessible and affordable public transport services around the country since the launch of the Policy.
• Work is now underway to develop a new Action Plan for the period 2026 to 2030, with many actions expected to support progress within our rural areas.
• In addition to the above, the Department of Transport is finalising a new transport strategy called Moving Together. This Strategy seeks to support greater efficiency across the transport system in a fair and equitable way. It is built on four key principles, one of which is Rural Recognition. Under this principle, the Strategy recognises that people in rural areas are generally more reliant on cars and, on average, use them more than those in urban areas. The implementation of actions under this Strategy will have due regard for this principle and will include performance-based metrics.
• Aligned to this work, the Department has commenced analysis on the development of transport poverty indicators, which will help to inform investment decisions and evaluate the impacts of any investment on those most vulnerable to transport poverty, including households in rural or isolated areas of the country.
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Research on cost burden for motorists
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• The Department of Transport, in collaboration with ESRI, is conducting research to assess the real and perceived financial implications on individuals of car ownership and car use, including surveys across a nationally representative sample based on geographical spread as well as other socio-economic factors.
• This study aims to understand attitudes and behaviours around car use, and identify barriers and solutions that support a shift to more sustainable modes of transport.
• The first set of outputs are expected to be available in Q1 2026 and will be used to inform future policy decisions.
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Lower Total Cost of Ownership (TCO) of Electric Vehicles
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• There is a suite of incentives in place from ZEVI, and where applicable with support from taxation incentives through the Department of Finance, to support the continued transition to EVs, including a purchase grant for battery electric vehicles; a home charger purchase grant; VRT relief of up to €5,000; and a low rate of annual motor tax.
• Home charging of electric vehicles often means lower running costs and many EVs are now capable of doing over 400km on a single charge, which will meet most people’s daily driving needs.
• TII are leading on the delivery of charging infrastructure along our motorways and national primary and secondary routes and we have launched grant aid programmes for the delivery of significant high powered charging infrastructure on these roads, to ensure that EV drivers have reliable access to charging points across the country.
• Also of significant relevance to motorists is the Regional and Local EV Charging Network Plan. This plan describes how Local Authorities will facilitate the provision of local charging networks, further increasing EV viability.
• Officials from my Department have been engaging actively with Local Authorities to develop their own regional charging plans to meet the various needs of users at the local level, whether urban or rural.
• Work has commenced on a new EV Infrastructure Strategy, covering the period 2026-2028.
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Rollout of LocalLink etc to reduce overall car use costs for rural drivers.
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• The Connecting Ireland Rural Mobility Plan is a major national public transport initiative with the aim of increasing public transport connectivity, particularly for people living outside the major cities and towns.
• Since it began in 2022 185 new and enhanced services have been implemented connecting over 240 towns and villages to the public transport network. These routes have provided 41 connections to higher education facilities, 61 connections to healthcare facilities, and 71 connections to existing rail services.
• Approximately 600,000 people now have access to these new or enhanced bus services.
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Utilisation of Tax Incentives to Reduce Costs
The existing vehicle tax structures in the State have a strong environmental rationale, with the more pollutant, fossil-fuelled cars paying higher rates of tax, while low emission cars are subject to the lowest rates of tax. The current policy approach aims to incentivise the uptake of zero to low emission vehicles, which will support a reduction in Ireland’s transport emissions, while also fostering a more sustainable transport network.
Electric vehicles (EVs) currently benefit from a number of tax incentives, including preferential rates of benefit-in-kind (BIK), Vehicle Registration Tax relief of up to €5,000, a low annual motor tax rate, and a BIK exemption on the installation of an EV charging facility by an employer at the home of a director or employee.
VRT on category A vehicles (generally passenger cars) is assessed based on the value of the vehicle and its emissions levels for carbon dioxide (CO2) and nitrogen oxide (NOx). The total VRT charge increases according to the emissions output of the vehicle involved and its market value. The CO2 component of the VRT charge is a percentage of the vehicle’s Open Market Selling Price (OMSP), with the lowest 7% rate applicable to vehicles with zero CO2 emissions. This is in addition to the existing VRT relief for EVs, of up to €5,000.
Finance Act 2024 introduced an emissions-based VRT structure for category B vehicles (generally light commercial vehicles) which has applied since 1 July 2025. For vehicles with CO2 emissions of more than 120g/km, VRT is calculated at 13.3% of the OMSP of the vehicle. For category B vehicles with emissions of 0g/km up to and including 120g/km, a reduced rate of 8% of the OMSP applies.
In the Finance Act 2025, the tables used to calculate BIK liability on employer-provided cars were amended to incorporate a new category for zero emission cars. As of 1 January 2026, the new A1 vehicle category introduces reduced BIK rates for electric cars, with rates of 6-15%, depending on business mileage.
As part of Budget 2026, the temporary universal reduction to the Original Market Value (OMV) of cars in categories A-D and to all vans, which reduces the amount of BIK payable, as extended on a tapered basis for three further years of assessment, to end on 31 December 2028. The relief will remain at €10,000 for the 2026 year of assessment, reducing thereafter to €5,000 for 2027 and €2,500 for 2028. Additionally, the lower limit in the highest mileage band was permanently reduced from 52,001km to 48,001km from 1 January 2026. This change is designed to cater for employees who have high business mileage, and the amendment will result in their BIK liability being reduced.
Vehicle tax policy is examined annually as part of the annual Budget process, including presentation of policy options via the Tax Strategy Group. Existing and potential new tax measures or amendments are examined during this process.
