Fuel Excise Cut Ends 30 June — Prices Jump 26.3c/L

Here's the short version. Since 1 April 2026 the federal fuel excise has been temporarily halved, knocking 26.3 cents per litre off the price you pay at the bowser. The cut is saving the average household around $13.15 per 50-litre tank. A weekly commuter burning through 60 litres is pocketing about $15.78 a week, which adds up to roughly $205 across the three-month relief period.

The relief was announced in the March 2026 pre-election fiscal update and legislated as a temporary measure through the Excise Tariff Amendment (Cost of Living Relief) Act 2026. It's a near-copy of the 2022 Morrison cut, which halved excise from 44.2c/L to 22.1c/L for six months. This one runs for three months and expires at 11.59pm on 30 June 2026.

On 1 July, unless the incoming government extends it, the excise snaps back to the full indexed rate of around 52.6c/L. Retailers will pass that through within days. We've already seen the ACCC warn servos against "holding back" stock to profiteer on the changeover: expect close monitoring from 25 June through mid-July.

Diesel gets the same cut. LPG and ethanol blends get partial treatment. If you're running a ute, a 4WD or a work van, the difference is meaningful.

Mark these dates.

• 1 April 2026: Excise cut commenced. Halved rate of 26.3c/L applies from midnight.
• Mid-April 2026 (happening now): ACCC monitoring phase kicks in. Fuel retailers must report weekly margin data.
• Early May 2026: Federal Budget handed down. Treasurer decides on extension, phase-down, or hard stop.
• 30 June 2026, 11.59pm: Current cut legislated to expire.
• 1 July 2026: Full excise rate of ~52.6c/L resumes unless Parliament legislates an extension.
• 1 August 2026: Semi-annual excise indexation review (separate from the cut) potentially lifts the base rate again in line with CPI.

The Budget window is the critical moment. Treasurer's budget speech is expected in the first week of May, and the excise decision will be one of the most closely watched cost-of-living lines. If the government decides to extend, expect a six-month continuation (to 31 December 2026) rather than a further three months. If it decides to phase down, we'd likely see the cut reduced to 13.15c/L for another quarter before full expiry.

A hard stop on 1 July is also plausible. Treasury's position in the pre-Budget submissions is that the cut should be "time-limited and non-recurring." We'll find out which position wins when the budget papers drop.

Three political arguments push hard for an extension.

1. Election politics. The next federal election is due by May 2027 but there's persistent speculation about an earlier poll. Letting fuel jump 26.3c/L overnight, right after a budget, is the kind of decision that costs governments marginal seats. Every cent at the bowser is felt in outer-suburban electorates where commuting distances are long and public transport thin. Queensland, Western Sydney and the Victorian mortgage belt are the battlegrounds.

2. RBA inflation view. The RBA's March 2026 Statement on Monetary Policy has headline CPI tracking around 2.7% year-on-year. A sudden 26.3c/L jump would add roughly 0.4-0.5 percentage points to headline inflation in a single month, potentially pushing the print back above the top of the target band. That could delay the next rate cut, which is politically painful and economically counterproductive.

3. Business and transport lobbying. The Australian Trucking Association, NatRoad, and the MTAA have all lodged Budget submissions arguing for an extension. The ATA estimates the expiry would add $2,400-$3,800 per year to the running cost of a typical long-haul B-double, which gets passed down the supply chain into grocery prices.

Put it together and there's a credible case. Cost-of-living relief plus inflation management plus freight cost pass-through is a policy trifecta that politicians don't usually ignore.

The counter-case is just as strong, and arguably stronger on the economics.

1. It's expensive. Halving the excise costs the Commonwealth approximately $2.55 billion per quarter in forgone revenue. A six-month extension is $5.1 billion. A full-year extension is $10+ billion. In a budget already running a structural deficit and facing NDIS, defence and aged care spending pressures, that's real money.

2. Treasury genuinely doesn't like it. Treasury's consistent position across Coalition and Labor governments is that fuel excise cuts are poorly targeted, regressive on a dollar-for-dollar basis (wealthier households have bigger cars and drive more), and undermine both revenue stability and long-run incentives to transition to EVs. The Treasury Secretary flagged in February 2026 testimony that the cut should be treated as "a bridge, not a destination."

3. Hypothecation to roads. Fuel excise is notionally linked to road funding. Every billion dollars of excise forgone is a billion dollars less in the Roads to Recovery, Black Spot, and Infrastructure Investment Programs. State governments and regional MPs hate this.

4. Climate policy signalling. Extending a subsidy on petroleum fuel sits awkwardly alongside the Safeguard Mechanism reforms and the 2035 emissions target. Expect the climate lobby to make this argument loudly in the Budget week.

Net read: 40% chance of a clean expiry on 1 July, 35% chance of a 3-month phase-down, 25% chance of a 6-month extension. Don't bet the mortgage.

The expiry impact isn't spread evenly. Some workers cop it harder than others.

Long-haul and local truck drivers. Diesel users feel this first and hardest. A B-double running 100,000km a year at 55L/100km burns 55,000 litres annually. At 26.3c/L, that's $14,465 a year in additional fuel costs when the cut ends. Most operators can't absorb that: expect freight surcharges of 3-6% flowing through from mid-July. Owner-drivers and small fleets will feel it immediately.

Tradies with utes and vans. A typical sparky or plumber running a Hilux or Ranger and covering 40,000km per year at 10L/100km burns 4,000L. That's $1,052 a year hitting directly on the fuel card. For subbies on fixed-price contracts signed before 1 July, it's unrecoverable. New quotes will price it in.

Delivery drivers and rideshare. Uber Eats, DoorDash and Amazon Flex drivers are among the most exposed because their margins are already razor-thin. A rideshare driver doing 60,000km/year at 8L/100km burns 4,800L: $1,262 a year off the bottom line. Most rideshare platforms do not adjust per-km rates when excise changes, so the hit falls entirely on the driver.

Regional workers. Anyone living 50km+ from work is looking at $800-$1,500 extra per year on the commute alone. Regional FIFO workers driving to airports, nurses doing rural rotations, and farm workers are the most exposed. There's no public transport substitute.

Salary-packaged novated lease drivers. These are partially insulated because fuel is pre-tax for packaged vehicles. The post-tax equivalent cost of the 26.3c/L rise is roughly 15-17c/L for a 37% marginal rate, which still stings but less than for a non-packaged driver.

If you use your car for work, the fuel excise jump is partly offset at tax time. The ATO gives you two methods, and the right choice depends on your kilometres and record-keeping.

Cents-per-kilometre method. For the 2025-26 year the rate is 88c/km, capped at 5,000 work kilometres. That's a maximum deduction of $4,400. The rate already bakes in fuel, insurance, rego and depreciation. You don't need receipts, but you do need a reasonable basis for your kilometre estimate (diary, work calendar, job sheets).

Logbook method. For anyone driving more than 5,000 work km, the logbook method almost always gives a bigger deduction. You keep a 12-week logbook to establish a business-use percentage, then claim that percentage of your actual running costs (fuel receipts included). When excise rises, the logbook method captures the increase directly: cents-per-km doesn't catch up until the ATO revises the rate (usually with a 6-12 month lag).

Key rules:

• Home-to-work travel is not deductible under s.8-1 of the Income Tax Assessment Act 1997, unless you're carrying bulky tools that can't be left on site (a recognised exception under Lunney v FCT (1958) 100 CLR 478)
• Between-jobs travel is deductible if you travel from one job to another during the day
• Tradies using a ute for tools and materials typically qualify under the bulky tools exception
• Keep fuel receipts, or use a digital fuel card that exports monthly statements

If the cut ends on 1 July and you're on the logbook method, switch to tracking your actuals from that day onwards. The ATO's myDeductions app handles both methods. Use our take home pay calculator to see how bigger car deductions flow through to your net income.

Five practical moves while the cut's still in place.

1. Fill up on 30 June. Petrol stations still holding pre-July stock will be priced at the lower excise rate on the last day. The rollover to the new rate happens on deliveries, not on pump activation, so early-July fills at independent servos can still catch the cheaper fuel for 3-7 days. Use FuelCheck (NSW), Fuel Map Australia or the 7-Eleven Fuel App to find the lowest prices.

2. Lock in fixed-price work now if you're a tradie. Any quote you issue for work extending past 1 July should price in a 26.3c/L diesel jump. Tools like hourly rate calculators can help you rebuild your cost base.

3. Check your novated lease budget. If you're on a packaged car, ask your novated lease provider whether your fuel budget assumption will need to be revised from 1 July. Most will auto-adjust, but some require you to flag it.

4. Start your logbook if you don't have one. You need 12 consecutive weeks of data for it to be valid for the whole year. Starting it now captures both the low-excise and high-excise periods and gives you a clean basis for 2026-27 claims.

5. Watch budget night. The Treasurer's speech is your early warning. If extension is announced, you can exhale. If it's a hard stop, you've got six to eight weeks to adjust. Either way, don't be caught out by a 26.3c/L jump appearing on your card without warning.

And if you're running a business with significant fuel costs, the Fuel Tax Credits scheme (for off-road use and heavy vehicles over 4.5 tonnes) is not affected by the excise cut. Eligible businesses continue to claim back excise via BAS, regardless of what happens on 1 July.

Does the fuel excise cut apply to diesel?
Yes. Diesel and petrol are both cut by 26.3c/L from 1 April to 30 June 2026. LPG gets a proportional cut. AdBlue and lubricants are unaffected.

Will servos pass the full cut through?
The ACCC is monitoring weekly margin data and has warned retailers against pocketing the cut. During the 2022 cut, pass-through was about 95% within 10 days. Expect similar this time.

What happens on 1 July 2026 if nothing changes?
The full excise rate of approximately 52.6c/L resumes automatically. The legislation has a sunset clause: no parliamentary vote is needed for the cut to expire.

Can my employer make me cover the fuel cost increase on my work vehicle?
No, not for vehicles you use for work tasks. Under s.324 of the Fair Work Act 2009, unauthorised deductions from wages to cover business costs are unlawful. If you use your own car and claim a per-km reimbursement, the rate should adjust to reflect actual costs.

Are electric vehicle drivers affected?
No. EVs pay no excise. However, Victoria's per-km EV road user charge was struck down by the High Court in Vanderstock v Victoria [2023] HCA 30, so for now EV drivers avoid the jump entirely. That may change if a federal road user charge is legislated.