Budget 2022: How It Affects Motorists

A look at what Budget 2022 means for motorists.

Budget 2022, announced today by the Minister for Finance, Paschal Donohoe, brought little in the way of surprises. Welfare and fuel allowance payments are up, as is investment in public transport. Meanwhile, 19- to 23-year-olds are to get a 50 per cent reduction in bus and train fares, and there are other capital projects at a cost of €1.4 billion. 

There were a number of other elements to the budget too that will be of interest to motorists including €30 million allocated to road maintenance.

Cost of fuel

Carbon taxes are to rise to €7.50 per tonne, which will drive up the price of fuel. As of midnight tonight (Tuesday 12 October, 2021), the price of a litre of petrol will increase by 2.1c per litre and of diesel by 2.5c.

VRT changes

The current €5,000 Vehicle Registration Tax (VRT) exemption for battery-electric cars up to a value of €40,000 will be extended to the end of 2023. This exemption for low-emission cars had been expected to be rolled-back, so it’s a small surprise.

VRT elsewhere will increase and, with it, the price of new cars from the start of January 2022.

The twenty-band emissions-indexed VRT calculation system will remain with a 1% VRT increase for new vehicles that fall between bands 9-12, a 2% increase for vehicles in bands 13-15 and a 4% rise for the highest-emission vehicles in bands 16-20. This will now bring the VRT rate in the top tier to 41 per cent.

Rates for low-emission vehicles producing less than 110g/km of CO2 in bands 1-8 remain unchanged.

Motor tax

Aside from VRT, there has been no changes to general motor tax rates.


Little detail was given on this one, but the Accelerated Capital Allowance scheme for gas- and hydrogen-powered vehicles and refuelling equipment has been extended for three years. Ireland currently has little in the way of hydrogen infrastructure despite the recent introduction by Bus Éireann of three hydrogen-fuelled double-decker buses on its Ratoath to Dublin route. Hydrogen could form an important element of the world’s energy supply in the future, so any investment in the technology is to be welcomed.


Although AA Ireland praised the government’s planned investment in public transport initiatives, it was critical of some of the other motoring-related measures.

Paddy Comyn, AA Ireland’s Head of Communications said: “We were aware that there would be increased taxation in this Budget, and it does appear that there are steps in the right direction in terms of keeping EV grants in place, but there is a worry that this is being paid by lower-income motorists being forced to stay in older cars.”

“Increases in the price of petrol and diesel,” he said, “were expected – but this is on the back of what is a 25% increase in prices of petrol and diesel over the past 12 months. Irish motorists are already paying around 60% in tax at the pumps for their fuel. For some motorists, moving into an EV is as yet too far a stretch, and they have no choice but to now pay more to get around, as the public transport network remains imperfect, especially outside of the capital.”