New Tax Exemption Requirements for Purchasing New Energy Vehicles in 2026

Attention! Starting next year, there will be new requirements for the purchase tax exemption when buying new energy vehicles. The Ministry of Industry and Information Technology, the Ministry of Finance, and the State Taxation Administration have recently announced new technical requirements for the exemption of vehicle purchase taxes for new energy vehicles from 2026 to 2027. These adjustments specifically pertain to pure electric passenger vehicles and plug-in hybrid passenger vehicles (including range-extended models). What are the specific adjustments?

Pure Electric Passenger Vehicles

For pure electric new energy vehicles, the new regulations stipulate that the amount of electricity consumed for every 100 kilometers cannot exceed the “power consumption limit” set by the state for similar types of vehicles. If the vehicle is particularly heavy, such as having a maximum design total mass exceeding 3.5 tons, it must adhere to the power consumption standards applicable to the 3.5-ton category. In simple terms, the heavier the vehicle, the stricter the energy-saving requirements.

Plug-in Hybrid (Including Range-Extended) Passenger Vehicles

For plug-in hybrid new energy vehicles, including models that can be charged and refueled, the new regulations specify three conditions that must be met: First, when running solely on electricity, the “effective range” must be at least 100 kilometers. Second, there are stricter requirements for fuel consumption and electricity consumption; for example, when the battery is depleted and the vehicle relies on fuel, the fuel consumption must be lower than the “fuel consumption limit” set for similar types of vehicles by the state. Lastly, similar to pure electric vehicles, if a plug-in hybrid has a maximum design total mass exceeding 3.5 tons, it must comply with the 3.5-ton vehicle standards.

When Will These Adjustments Take Effect?

Starting January 1, 2026, vehicles listed in the Directory of New Energy Vehicles Eligible for Purchase Tax Exemption (hereinafter referred to as the “Exemption Directory”) must comply with these new requirements. Vehicles that were included in the Exemption Directory before December 31, 2025, and meet the technical requirements outlined in this announcement will automatically transfer to the first issue of the 2026 Exemption Directory. Vehicles that do not meet the requirements will be removed from the Exemption Directory. Any vehicle that does not comply with this announcement and wishes to be included in the first issue of the 2026 Exemption Directory must complete the declaration by December 12, 2025. Vehicles that have been removed may reapply for inclusion in the Exemption Directory.

From January 1, 2026, and onwards, once the new Exemption Directory is published, consumers can enjoy the purchase tax exemption policy for new energy vehicles listed in the Exemption Directory.

Impact of the New Regulations on Automakers and Consumers

For consumers, the inability to enjoy purchase tax exemptions on vehicles that do not meet the new technical requirements will change the cost of purchasing a vehicle. Some outdated models may exit the market due to non-compliance with the new standards, which could temporarily narrow the range of vehicle choices for consumers. However, in the long run, this will encourage the market to offer more high-quality products, prompting consumers to pay closer attention to vehicle technical parameters and make informed choices.

Cui Dongshu, Secretary-General of the Passenger Car Association, believes that the new regulations will promote upgrades in battery capacity and hybrid systems, enhance the driving experience, and improve product safety and competitiveness. “Strict standards will drive companies to launch higher-performance models that meet consumer demands for extended range and low energy consumption, thus expanding the market while supporting green and low-carbon development, achieving a win-win situation for industrial upgrade and consumer upgrade,” stated Lang Xuehong, Deputy Secretary-General of the China Automotive Dealers Association. “This adjustment raises energy consumption requirements for certain models that will have their purchase tax halved starting January 1 next year, helping to eliminate outdated production capacity and enhance the overall technical level of new energy vehicles.”