The Strategist

Japan to abolish tax breaks for internal combustion engine cars starting in 2025

12/13/2022 - 06:08

The Nikkei claims that Japan plans to gradually remove vehicles with gasoline or diesel engines from the program of tax breaks. Starting in 2024, the requirements for eligibility will be more stringent, and by 2025, owners of automobiles with internal combustion engines will nearly exclusively be ineligible for tax credits.

Robert Couse-Baker via pxhere
Robert Couse-Baker via pxhere
The amount of gasoline consumption should not go over 25.4 kilometers per liter, according to the regulations now in effect in Japan. Only the first seven years after purchase are totally tax deductible for vehicles that surpass this threshold by 20%.

Only a 50% tax benefit is given for the first required inspection, which happens three years after the car is purchased, for those who meet the aim of 75% fuel economy. Only those whose automobile exceeds the objective by 40% are eligible for the rebate.

Beginning in January 2024, the authorities plan to tighten these regulations. Owners of vehicles that exceed the aim by 20% would earn a 50% discount under the country's tax authority proposal, while only those whose vehicles exceed the target by no more than 30% would be eligible for the deduction of 25%. Diesel cars will be subject to similar regulations.