Budget 2027: What Irish Motorists Need to Know Before Buying Their Next Car
Vendor Finance Ireland | October 2026
Budget 2027 has introduced changes that could affect the cost of buying and running a car in Ireland.
From higher Vehicle Registration Tax (VRT) on certain petrol, diesel and hybrid vehicles to extended fuel duty reductions and continued support for electric cars, there are several announcements worth understanding if you’re planning to change your vehicle.
At Vendor Finance Ireland, we’ve broken down the key developments and what they mean for Irish motorists.
- Higher VRT on Certain Petrol, Diesel and Hybrid Cars
One of the main announcements is a one-percentage-point increase in VRT rates for cars in CO₂ emissions bands 3 to 20, proposed to take effect from 1 January 2027.
The increase will affect certain new cars and imported used cars when they are registered in Ireland.
For example, where an affected vehicle has a Revenue Open Market Selling Price of €30,000, the additional VRT would be €300, assuming its valuation and classification remain unchanged.
However, this does not mean that the price of every second-hand car in Ireland will automatically increase.
If you’re buying a used car already registered in Ireland, you do not normally pay VRT again.
This is an important distinction for customers considering their next used vehicle.
- Petrol and Diesel Duty Reductions Extended
Budget 2027 has extended the temporary excise duty reductions on petrol and diesel until the end of February 2027.
These reductions had been scheduled to expire sooner, so the extension provides motorists with short-term relief from higher fuel taxation.
However, the Government plans to restore the excise reductions in four stages between March and June 2027.
There are also scheduled changes to carbon tax on motor fuels during 2027.
For drivers covering substantial annual mileage, fuel consumption remains one of the most important factors when choosing their next car.
For example, a motorist driving 20,000 kilometres per year in a vehicle consuming 6 litres per 100 kilometres would spend an additional €120 annually if the average pump price increased by 10 cent per litre.
Actual fuel prices will depend on a range of factors, not solely Government taxation.
- Electric Vehicle VRT Relief Extended to 2028
There is positive news for motorists considering an electric vehicle.
The Government has announced that VRT relief for qualifying battery-electric cars will continue until 31 December 2028.
Under the existing scheme, eligible electric vehicles can benefit from relief of up to €5,000, depending on the vehicle’s taxable value and the VRT otherwise payable.
This provides continued support for the electric vehicle market.
However, it is important to remember that the relief applies to qualifying vehicle registrations. It is not an automatic discount when purchasing an electric car already registered in Ireland.
Fully electric passenger cars also continue to benefit from annual motor tax of €120.
- What About Hybrid Cars?
Hybrid vehicles remain an option for motorists who want to reduce fuel consumption without relying entirely on charging infrastructure.
However, hybrids are not automatically exempt from the Budget’s VRT changes.
Whether a particular hybrid or plug-in hybrid is affected depends on its official CO₂ emissions and VRT band.
When comparing vehicles, motorists should examine purchase price, fuel economy, tax, maintenance costs and how the vehicle will be used.
- Should You Change Your Car Before 2027?
The answer depends on your circumstances.
If you’re considering a new or imported petrol or diesel car affected by the VRT changes, the proposed January 2027 increase may be relevant to the cost.
However, buying a used car already registered in Ireland is different, as the new VRT rate does not normally apply again when the vehicle changes ownership.
There are other important factors to consider before changing your car, including:
- Your existing vehicle’s value and any outstanding finance.
- The cost of the replacement car.
- Monthly finance repayments and the overall cost of credit.
- Fuel, motor tax, insurance and servicing costs.
- Your expected annual mileage and future driving requirements.
It is important not to make a purchase decision based on tax changes alone.
- How Vendor Finance Ireland Can Help
At Vendor Finance Ireland, we help motorists arrange Hire Purchase finance for both new and used cars through our dealer partners and direct enquiries.
Whether you’re buying your first car, upgrading your family vehicle or considering a move to hybrid or electric motoring, we can help you explore finance options that suit your circumstances.
Our aim is to make the finance process straightforward, with clear information about repayments, borrowing costs and available terms.
Planning to change your car in 2027?
Contact Vendor Finance Ireland to discuss your car finance requirements or ask your dealer about our finance options.
Finance is subject to lending criteria, credit assessment and approval. Budget 2027 measures are based on announcements made in October 2026 and remain subject to final legislation. Terms and conditions apply.
