Norway will finally keep some tax incentives when buying an electric vehicle

Norway’s political parties have reached a budget agreement for 2026 that modifies the tax incentives for electric vehicles, although in a more limited way than the government’s initial proposal.

From 1 January 2026, the 25 percent VAT will be applied to the portion of the price exceeding 300,000 Norwegian kroner, roughly 25,500 euros. Currently, electric vehicles are exempt from VAT up to 500,000 kroner, which makes them much more attractive to buyers.

Thus, with the new 300,000-kroner limit, only the most affordable city models will escape the tax, which will significantly reduce the options for all those looking for mid-range electric models.

Gradual phase-out of tax incentives

Following this agreement, the original idea of completely eliminating the VAT exemption in 2027 has also been ruled out. The compromise reached establishes a progressive dismantling. In 2027 the threshold will drop to 150,000 kroner, roughly 12,800 euros, and the exemption will finally disappear entirely in 2028. In practice, with such a low limit in 2027, very few new models will be able to benefit, since even future affordable electric city models, which are expected to cost between 20,000 and 25,000 euros, will exceed that cap.

The Norwegian Electric Vehicle Association, Norsk Elbilforening, has welcomed the agreement, describing it as a relief because it allows a more gradual transition, which will help maintain momentum towards reducing emissions.

The adjustment of these incentives comes as no surprise in a country where electric vehicles already account for more than 97 percent of registrations. The uncertainty caused by the anticipated removal of the VAT exemption led to a notable increase in electric vehicle sales last November, nearly doubling the figures recorded a year earlier.

In November 2025, 19,427 fully electric vehicles were registered in Norway. A record figure, well above that recorded in previous years for the same month, with a market share for this type of vehicle reaching 97.6 percent, very close to the annual average. Meanwhile, combustion engine vehicles and plug-in hybrids accounted for a share that can already be considered practically marginal.