The Arizona government's coalition agreement contained many sweeping changes for business owners. The tax revival of plug-in hybrid cars was one of the most notable changes.
What tax rules should you take into account as a self-employed person when buying a plug-in hybrid in 2026? In this article, we clearly outline the main points of attention.
What new tax rules apply to the self-employed?
The tax deductibility of car expenses is still calculated using the formula based on the CO₂ emissions from the car:
120% - (0.5% x number of grams of CO₂/km)
The CO₂ coefficient is no longer part of the formula for determining the deductibility of a car.
False hybrids and the impact of stricter standards
Due to the low CO₂ emissions of plug-in hybrids, the costs related to these cars until last year were mostly up to 100% deductible. However, this only applied to hybrid cars that had a battery with an energy capacity of at least 0.5 kWh per 100 kilograms of vehicle weight, and did not emit more than 50 grams of CO₂ per kilometer.
Wagons that did not comply were also called 'false hybrids' and were tax-equivalent to fuel-only cars, which meant lower deductibles.
As a result of the amended "EURO-6e-bis" emissions standard, a lot of cars would exceed the 50-gram CO₂ limit in the future, and qualify as a "false hybrid. However, the federal government is now raising the CO₂ limit from 50 grams to 75 grams of CO₂ per kilometer For cars covered by the new EURO-6e-bis standard.
Plug-in hybrids remain attractive to the self-employed
In addition, the finishing Of the tax deductibility of "real" plug-in hybrid cars deferred. In addition, it deduction rate 'locked in' again in the year in which the car is ordered, which would consequently eliminate a "phase-out" scenario for the self-employed throughout the car's useful life.
Under these new self-employed rules, plug-in-hybrid cars, depending on their CO₂ emissions, can again enjoy a deduction regime similar to that of a all-electric vehicle.
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Deduction regime for plug-in hybrid cars (Arizona government ) |
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Car Costs | Fuel (gasoline/diesel) |
Electricity |
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Order in 2025 |
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| Emissions < 50 grams |
2025 -> 75% |
50% tem. 2026 | 100% |
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2026 -> 100% |
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Emissions 51 - 75 grams |
75% |
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| Emissions > 75 grams |
‘False hybrid’ |
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Order in 2026 |
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| Emissions < 50 grams |
2025 -> 75% |
0% | 100% |
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100% |
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Emissions 51 - 75 grams |
75% | ||
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Order in 2027 |
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| Emissions < 50 grams |
95% |
0% | 95% |
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Emissions 51 - 75 grams |
75% |
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Order in 2028 |
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Emissions < 50 grams |
90% | 0% |
90% |
| Emissions 51 - 75 grams |
65% |
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Order in 2029 |
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| Emissions < 50 grams |
82.50% |
0% | 82.5% |
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Emissions 51 - 75 grams |
57.50% |
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Order from 2030 |
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| Emissions < 50 grams |
0% |
0% |
0% |
| Emissions 51 - 75 grams | |||
*The exact deduction percentage should be determined based on the existing formula: 120% - (0.5 x number of grams of CO₂/km). The fuel coefficient will no longer be included in the formula.
The above deduction percentages remain applicable in each case for the entire useful life of the car (date of order to expiration of lease contract/sale).
Changed emissions standard causes substantial carbon increase
What standard?
On Jan. 1, 2025, the New European emissions standard 'EURO-6e-bis' for fuel cars introduced. Under this new standard, CO₂ tests for new cars will be significantly tougher be, with a higher measured CO₂ emissions as a result.
In practice, all new car models to be homologated from January 1, 2025 will already be covered by this new standard. From January 1, 2026, the CO₂ emissions of the existing car models recalculated should be based on this new standard.
What cars?
It goes only about new cars with a production date as of Jan. 1, 2025 (new models), or Jan. 1, 2026 (existing models). Cars produced before these dates will not be affected. For the majority of manufacturers, the EURO-6e-bis standard will apply to cars starting in model year 2026.
What impact?
The change in the method by which the emissions of plug-in hybrids are measured has resulted in a sharp increase in the official CO₂ emissions of these cars. In general, the for most plug-in hybrids about doubling emissions.
What does this mean for you as an entrepreneur?
Are you self-employed without a corporation?
If so, this modified regulation offers you once again interesting tax advantages when purchasing a plug-in hybrid. Thanks to the increased emissions limit and the maintenance of a fixed deduction percentage, as a natural person you can continue to enjoy a favorable deduction regime very similar to that of electric cars.
Do you have a corporation?
Then the cost of plug-in hybrids purchased as of January 1, 2026 no longer deductible on corporate income tax.
For cars that are no later than December 31, 2025 were purchased, the phase-out arrangement remains moneys.
Also read: Company cars in 2026: everything you need to know about tax rules and concerns
Are you considering purchasing a company car?
Always be well guided in your choice. Together we will gladly look at what is fiscally most interesting today (and tomorrow). Feel free to contact our Titeca pro experts.