Novated Lease Tax Calculator
Estimate how much income tax a pre-tax novated lease deduction saves at 2026-27 rates. An estimator for sense-checking provider quotes, not a quote itself.
- Eligible electric cars are exempt from fringe benefits tax, which is why EV novated leases can run fully pre-tax.
- An exempt EV is still a reportable fringe benefit, so it can affect HELP repayments and other income-tested amounts.
| Line | No lease | With lease |
|---|---|---|
| Taxable income | $100,000 | $88,000 |
| Income tax + Medicare | $22,520 | $18,680 |
| Take-home pay | $77,480 | $69,320 |
| Tax saved | $3,840 |
An estimate of the income tax effect only, at 2026-27 resident rates. FBT, GST, running costs, provider fees and any post-tax contribution are not modelled. Compare against your provider's full quote.
How a novated lease cuts your tax
A novated lease is a three-way agreement between you, your employer and a finance company. Your employer makes the lease payments out of your salary, and the pre-tax portion lowers your taxable income. On a $100,000 salary with $12,000 of pre-tax deductions, taxable income drops to $88,000 and tax falls by $3,840 for 2026-27. The calculator above runs your own numbers; it belongs to the same family as the rest of our tax calculators.
The mechanism is the same one behind super sacrifice: swap salary taxed at your marginal rate for a benefit paid before tax. The difference is the destination. Super has a flat 15% contributions tax, while cars bring fringe benefits tax into the picture, and FBT is what provider quotes spend most of their effort managing. For the super version of the arithmetic, see the salary sacrifice calculator.
The electric car FBT exemption
Exempt from FBT when all three hold
- The car is a zero or low emissions vehicle
- It was first held and used on or after 1 July 2022
- Luxury car tax has never been payable on its importation or sale
Outside the exemption
- Plug-in hybrids from 1 April 2025, unless a binding commitment from before that date continues
- Cars that ever triggered luxury car tax
- Petrol and diesel cars, which is where quotes add post-tax contributions to manage FBT
The exemption covers the private use of an eligible electric car and associated expenses, including the electricity to charge it. One catch worth underlining: the benefit is exempt from FBT but still counts as a reportable fringe benefit on your income statement, which feeds income tests even though no FBT is paid.
Watch-outs before you sign
This page models the income tax effect of the pre-tax deduction and nothing else. A real quote wraps in FBT handling, GST treatment, running costs, provider fees and a residual payment at the end of the term. Those items decide whether the lease beats buying the car outright, so compare full quote against full quote, not tax saving against sticker price.
The reportable fringe benefit amount also matters if you carry a study loan, because it is added to HELP repayment income. A lease can push your compulsory repayment up even while it cuts your tax; check the effect with the HECS repayment calculator. And before committing to years of deductions, confirm the new pay leaves room to live on using the take-home pay calculator.
Frequently asked questions
Does a novated lease reduce taxable income?
Are electric cars exempt from FBT?
Do plug-in hybrids get the FBT exemption?
Does a novated lease affect HECS repayments?
Is this calculator a substitute for a provider quote?
What happens to the lease if I change jobs?
Sources
Narelle Hartigan is a CPA-qualified tax accountant with over a decade of experience in Australian personal taxation and payroll. She founded PAYG Calculator Australia to make tax withholding easy for every Australian worker to understand.