What BIK is
Benefit in Kind is the taxable value of any non cash benefit provided by an employer. The most common BIK is the company car, but it also includes vans, accommodation, loans, and medical insurance paid by the employer.
BIK is added to gross pay for tax calculation. PAYE, USC, and PRSI are charged on the notional value, even though no cash actually changes hands.
Car BIK calculation 2026
The BIK on a company car is a percentage of the Original Market Value (OMV). The percentage depends on:
- CO2 emissions category
- Annual business mileage
| CO2 category | Emissions g/km | Low business mileage rate | High business mileage rate (over 48,000 km) | | --- | --- | --- | --- | | A1 | 0 | 15 percent | 6 percent | | A | More than 0, up to 59 | 22.5 percent | 9 percent | | B | More than 59, up to 99 | 26.25 percent | 10.5 percent | | C | More than 99, up to 139 | 30 percent | 12 percent | | D | More than 139, up to 179 | 33.75 percent | 13.5 percent | | E | More than 179 | 37.5 percent | 15 percent |
Category A1 is new for 2026. Finance Act 2025 created it for cars with zero CO2 emissions, and from 1 January 2026 those cars carry rates of 15 percent down to 6 percent depending on business mileage rather than the 22.5 percent to 9 percent of category A [source]. An electric car is therefore category A1 in 2026 and category A in 2025 and earlier.
Electric vehicle relief
An electric car gets two reductions to its Original Market Value in 2026 and they stack, which is the part most summaries drop.
The general temporary reduction is €10,000. It applies to cars in categories A1, A, B, C and D, to all vans, and to all electric vehicles; it does not apply to a category E car. On top of that, a relief for electric vehicles only is worth €20,000 in 2026, down from €35,000 for 2023 to 2025. The combined reduction for an electric car in 2026 is therefore €10,000 plus €20,000 = €30,000, tapering to €15,000 in 2027 and €2,500 in 2028.
Worked example, petrol car
Conor has a company car with OMV €30,000, CO2 category C, low business mileage.
- BIK rate: 30 percent
- Annual BIK: €30,000 x 30 percent = €9,000
This €9,000 is added to his gross pay for tax purposes. At 40 percent PAYE plus 8 percent USC plus 4.2 percent PRSI, the marginal rate on the benefit is 52.2 percent:
- Tax cost: €9,000 x 52.2 percent = €4,698 per year
Worked example, EV with relief
Sinead has an electric company car with OMV €40,000 and low business mileage, for the whole of 2026.
- OMV after both reductions: €40,000 minus €20,000 minus €10,000 = €10,000
- The car is zero emission, so category A1, and under 26,000 business kilometres the rate is 15 percent: €10,000 x 15 percent = €1,500
- Tax cost at 52 percent marginal: €1,500 x 52 percent = €780
The EV treatment still makes a large difference, although the gap has narrowed: the same car in 2025 was a category A vehicle with a €45,000 combined reduction, so no BIK arose at all on a €40,000 OMV.
Worked example, high business mileage
Padraic drives 60,000 km annually for sales. Same car as Conor (OMV €30,000, Category C).
- BIK rate: 12 percent (high mileage band)
- Annual BIK: €30,000 x 12 percent = €3,600
His tax cost is far lower because of the mileage band.
Mileage thresholds
The same four business mileage bands apply to every CO2 category, A1 through E:
| Annual business km | Reduction factor | | --- | --- | | 0 to 26,000 | Full BIK | | 26,001 to 39,000 | Reduced | | 39,001 to 48,000 | Reduced further | | Over 48,000 | Lowest band |
Employee contribution
If the employee contributes toward the cost of the car, the BIK can be reduced by the contribution. Employers must apply this carefully.
Van BIK
A company van has a flat BIK of 8 percent of OMV in 2026, regardless of CO2 or mileage, provided private use is incidental.
Educational notice
BIK rules are detailed. Always consult Revenue.ie's manual on BIK or a qualified tax adviser for specific situations.