Canada proposes raising the luxury tax threshold for EVs to $150,000
Ottawa says fully electric and hydrogen vehicles priced up to C$150,000 would escape the luxury tax from 13 November, subject to Parliament. Other vehicles stay at C$100,000.
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Canada's federal government wants to take more electric cars out of its luxury tax. Finance Minister François-Philippe Champagne announced on 12 November a proposal to raise the price threshold at which the tax applies to fully electric and hydrogen-powered vehicles from C$100,000 to C$150,000, the Department of Finance said. The change would take effect on 13 November, subject to later approval by Parliament.
All other vehicles would stay at the existing C$100,000 threshold. The department said the move recognises the higher upfront cost of zero-emission vehicles.
How the tax works
The luxury tax applies to sales, imports, leases and some improvements of passenger vehicles above the threshold. The amount owed is the lesser of 10% of the vehicle's full value or 20% of the value above the threshold, according to the department. The proposal keeps that formula and only moves the threshold for eligible zero-emission vehicles, Drive Tesla Canada notes.
On those rules, an EV priced at C$140,000 would currently owe C$8,000 (20% of the C$40,000 above C$100,000) and would owe nothing under the proposed threshold. A C$170,000 EV would see its tax fall from C$14,000 to C$4,000. These are our own illustrations of the published formula, not government examples.
Who is affected
The change mostly matters for high-end EVs, a segment that has shrunk. Drive Tesla Canada points out that Tesla has discontinued the Model S and Model X, and works through what the change would have meant for Cybertruck prices, noting that the truck already had a separate exemption.
Charging money in the background
The department paired the announcement with reminders of Budget 2026 spending: C$587 million over five years from 2027-28 to install more than 55,000 EV chargers through a renewed Zero Emission Vehicle Infrastructure Program, and C$45 million for charging research and development. It says Ottawa has supported more than 50,000 chargers to date.