New Tax Rules for Electric Vehicles in 2025: Incentives and Changes

Private Use of Plug-in Hybrid Vehicles

The tax regime for plug-in hybrid vehicles has undergone significant changes. In the future, private use of such vehicles will be taxed at a reduced rate of 0.5% of the gross list price only if the car is used in fully electric mode for more than 50%. In addition, the minimum range requirements for electric mode have been revised, although the initially proposed increase in the minimum range to 80 kilometers was not accepted.

Adjustment of Taxation for Purely Electric Vehicles

Private use of fully electric vehicles continues to be taxed at a reduced rate of 0.25% of the gross list price of the car per month. The new development is the increase in the upper limit of the car’s price eligible for this benefit, from €60,000 to €70,000 (€ 6, paragraph 1, number 4, sentence 2, number 3, sentence 3 of the EStG).

Exemption from Vehicle Tax

Electric vehicles registered before December 31, 2025, remain exempt from vehicle tax for 10 years. After this period, the tax will be only 50% of the standard rate for internal combustion engine vehicles.

Incentives for Companies

Companies purchasing electric vehicles for business use continue to benefit from tax incentives. If a company electric car is used for private purposes, the tax base is calculated at the reduced rate (0.25% of the vehicle’s value per month). This makes electric vehicles particularly advantageous for corporate fleets.

Development of Charging Infrastructure

The government continues to invest in expanding the charging station network. In 2025, new support programs for private homeowners and businesses installing charging stations are planned. Part of the installation costs may be reimbursed through government subsidies.

Consultation with a Tax Lawyer

Due to changes in legislation regarding the taxation of electric vehicles, it is recommended to consult with a qualified tax lawyer. This will help ensure proper accounting of tax incentives, avoid possible errors in document processing, and maximize the benefits of existing support programs.

These measures are aimed at supporting the transition to electric transport and reducing CO₂ emissions in Germany.