Sydney, NSW – Electric vehicle (EV) owners in New South Wales are set to face a new road user charge from July 2027, with the state government confirming plans to proceed despite the High Court overturning a similar scheme in Victoria. The announcement, made on Friday, July 31, 2026, by NSW Treasurer Daniel Mookhey, signals a significant shift in how the state plans to fund road maintenance as the uptake of EVs accelerates across Australia.
The new charge is projected to collect a substantial $440 million from motorists in its first three years of operation, with battery electric vehicle (BEV) drivers expected to pay over three cents per kilometre and plug-in hybrid electric vehicle (PHEV) drivers 2.4 cents per kilometre.
This policy comes as Australians increasingly embrace electric mobility. Latest data for the second quarter of 2026 shows that electrified vehicles (BEVs, PHEVs, and hybrids) accounted for a record 49.16% of all new light vehicle sales. Battery electric vehicles alone reached a 21.03% market share during this period, marking the largest quarterly sales increase on record.
The Rationale Behind the Charge
The primary driver for introducing a road user charge is the decline in fuel excise revenue. As more drivers switch from internal combustion engine (ICE) vehicles to EVs, the federal government’s income from fuel excise, which contributes to road funding, diminishes. The recent reinstatement of the full 53.7 cents per litre fuel excise on August 2, 2026, after a four-month reprieve, has already seen petrol prices climb, further highlighting the revenue challenge.
“We’ve made clear our view that we do think that there is a logic that there be a national system,” Treasurer Mookhey stated, indicating the state’s preference for a federal approach. “But the state would press ahead without one.”
Despite this preference, the NSW government has established a working group within Service NSW to determine the most convenient method for motorists to pay for the distance travelled.
Comparing State Approaches
NSW’s decision to proceed with its own road user charge puts it in a unique position following the High Court’s 2023 ruling that struck down Victoria’s similar distance-based road user charge. Victoria is now the leanest state for EV buyers, with no remaining purchase incentives in 2026, and a $100 annual registration discount ending on January 1, 2026.
Other states have also considered or implemented similar measures:
| State/Territory | EV Road User Charge Status | Rate (if applicable) | Start Date | Notes |
|---|---|---|---|---|
| New South Wales | Confirmed | >3c/km (BEV), 2.4c/km (PHEV) | July 2027 | Forecast to collect $440M in first 3 years. |
| Victoria | Struck Down by High Court | N/A | 2023 | No longer applies. |
| Western Australia | Proposed | Not yet specified | July 2027 | Also considering a road-user charge. |
| Queensland | No direct charge | N/A | N/A | Offers reduced stamp duty and cheaper registration. |
Currently, the most significant federal incentive for EV buyers remains the Fringe Benefits Tax (FBT) exemption for eligible battery electric and hydrogen fuel cell vehicles priced under the Luxury Car Tax threshold of $91,387, when acquired through a novated lease. This can offer substantial savings, often outweighing state-based rebates.
Industry Reaction and Implications for EV Adoption
Motoring groups, including the National Roads and Motorists’ Association (NRMA) and the Electric Vehicle Council, have generally supported the concept of a road user charge. However, they argue that such a charge should ideally be introduced only once EVs constitute a more substantial portion of Australia’s total vehicle fleet, ideally around 30%.
The timing of this charge is critical. While EV sales are booming, with July 2026 seeing Tesla and Polestar combined deliveries jump 80.4% year-to-date compared to 2025, ongoing concerns about charging infrastructure and upfront costs persist for many potential buyers. The NSW government has previously invested over $330 million in its EV Strategy, including co-funding more than 3,250 charging plugs, aiming to address these infrastructure gaps. Further expansion of the fast-charging network, particularly in regional areas, and the rollout of kerbside chargers for those without home charging options, are key components of the updated NSW EV Strategy.
For Australian drivers considering an EV, understanding the total cost of ownership is paramount. While federal incentives like the FBT exemption offer considerable savings, state-specific charges like the upcoming NSW road user charge will need to be factored into calculations. Information on broader incentives can be found in our guide to Australian Energy Rebates in 2026: Your State-by-State Guide After Federal Relief Ends.
The introduction of this per-kilometre charge in NSW presents a new financial consideration for current and prospective EV owners. As the state moves forward with its plan, transparency in payment mechanisms and continued investment in charging infrastructure will be crucial to maintaining the momentum of EV adoption.
For more details on charging costs and reliability, refer to our guide on Public EV Charging in Australia 2026: Costs from 50c/kWh, Reliability & Avoiding Headaches.