Canada Increases Luxury Tax Threshold for EVs to $150,000

The Government of Canada announced today that it is adjusting the way it applies the luxury vehicle tax to the benefit of electric vehicle (EV) buyers.

Until today, all new vehicles that cost more than $100,000 were subject to luxury tax. That threshold will now increase, but only for EVs. As of November 13, the tax only applies to EVs that cost more than $150,000.

Vehicles that cost more than that are subject to a surcharge of either 10 per cent of the total value of the vehicle or 20 per cent of its value above the threshold ($100,000 for conventional vehicles, $150,000 for EVs), whichever is smaller.

The shift has been introduced with the nation’s latest proposed budget and, according Minister of Finance and National Revenue François-Philippe Champange, exists to better reflect the high cost of electrified vehicles.

“With Budget 2026, we are expanding our electricity system, cutting emissions, and unlocking new investment in clean technologies,” said Minister Champagne, in a statement. “By updating this measure to reflect today’s vehicle market, we are supporting the transition to a cleaner, more competitive economy.”

To be sure, adjustment would benefit premium EVs from manufacturers such as BMW, Mercedes, and Cadillac, which all sell vehicles in the $100,000-$150,000 range. However, some more mainstream vehicles, like the Chevrolet Silverado EV, whose most expensive trim level starts at around $110,000, could also benefit from this shift.

Benefitting all EVs nationwide will be another measure introduced in the proposed budget to invest $587 million over five years to install more than 55,000 charger in targeted areas, starting in 2027. The government has also committed $45 million to support research and development of charging infrastructure.