On 3 August 2026 the fuel excise on petrol and diesel goes back to 53.7 cents a litre. That is a rise of 17.1 cents a litre overnight, and 33.1 cents a litre on where it sat in April.
Most of the coverage has framed this as a motorist story. It is not. The way the excise system is built, the increase lands on three groups of business vehicles in three completely different ways, and the tier that absorbs every last cent of it is the one most Australian small businesses actually drive: the ute, the van and the wagon under 4.5 tonnes.
This report sets out what changes, what it costs a real work vehicle, and why the deduction method most sole traders default to stops doing its job at about 19,000 kilometres a year.
Fuel excise is a flat tax per litre, charged on producers and importers and passed down the chain. It is indexed to the Consumer Price Index twice a year, in February and August.
In 2026 it was also cut, twice, and is now being restored. The Australian Taxation Office publishes the rates, and this is the sequence:
| Period | Petrol and diesel | LPG | LNG and CNG |
|---|
| 1 April to 30 June 2026 | 20.6c per litre | 6.7c per litre | 14.1c per kg |
| 1 July to 2 August 2026 | 36.6c per litre | 12.0c per litre | 25.1c per kg |
| From 3 August 2026 | 53.7c per litre | 17.5c per litre | 36.8c per kg |
The government cut the excise by 32 cents a litre on 30 March 2026, then in late June extended relief at a reduced level of 16 cents until 2 August. From 3 August the remaining 16 cents comes back, plus 1.1 cents of CPI indexation, using an indexation factor of 1.020.
You will see 52.6 cents quoted in a fair bit of the reporting. That is the pre-indexation figure. The rate that actually applies from 3 August is 53.7 cents a litre, because the August CPI indexation lands on the same day the relief ends. Both the ATO excise schedule and the ACCC's weekly fuel price monitoring report of 31 July 2026 state 53.7 cents.
The difference matters if you are modelling a fleet. On 100,000 litres a year it is $1,100.
Excise is charged before GST, so the pump impact is the excise rise plus GST on top: 17.1 cents becomes about 18.8 cents a litre at the pump.
The ACCC applied exactly this method to the 1 July step, describing the 16 cent restoration as an impact of "up to 17.6 cpl" once GST is counted. The same arithmetic gives 18.8 cents for the 3 August step.
If you are registered for GST, you claim that GST portion back on your business activity statement, so your real cost increase is the 17.1 cents, not the 18.8. If you are a sole trader under the $75,000 threshold and not registered, you wear the full 18.8 cents.
This is the part that has gone almost entirely unreported.
Fuel tax credits let a business claim back some or all of the excise on fuel it uses for business. When excise goes up, the credit generally goes up with it, so businesses that can claim are shielded. But eligibility is not universal, and on 3 August one other number moves at the same time: the road user charge, which is deducted from the credit for heavy vehicles driving on public roads. It rises from 16.4 to 32.4 cents a litre, close to double.
Put the excise change and the credit change side by side and three tiers fall out:
| Your vehicle | Excise rise | Fuel tax credit change | Net cost you absorb |
|---|
| Light vehicle 4.5t GVM or less, on public roads (ute, van, car, wagon) | +17.1c/L | No credit exists | 17.1c/L, all of it |
| Heavy vehicle over 4.5t GVM, on public roads (truck, heavy tipper) | +17.1c/L | 20.2c to 21.3c, up 1.1c | 16.0c/L, 94% of it |
| Off public roads, or powering auxiliary equipment (excavator, generator, farm, mine site) | +17.1c/L | 36.6c to 53.7c, up 17.1c |
Read that middle row again. A heavy vehicle operator does get a credit, and the credit does rise, but only by 1.1 cents, because the road user charge takes 16 of the 17.1 cents back on the same day. Trucking on public roads absorbs 94% of the increase.
And the top row is the one that matters most for the readers of this site. The ATO's rules are explicit that you cannot claim fuel tax credits for "fuels you use in light vehicles of 4.5 tonnes GVM or less, travelling on public roads". A dual-cab HiLux, Ranger, D-Max or Triton is nowhere near 4.5 tonnes. Neither is a Transit, a HiAce or a Trafic. Every plumber, sparky, cleaner, mobile mechanic, courier, dog groomer and mobile physio in the country is in that tier, and that tier has no shield at all.
There is one exception worth knowing. Light vehicles do qualify for fuel tax credits when they travel off public roads, on work sites, mining sites and private roads. If a meaningful share of your kilometres are on a site rather than a road, that fuel is claimable, and from 3 August it is claimable at the full 53.7 cents. Very few small operators track this split, which means very few claim it.
Assumptions, stated up front so you can substitute your own: a dual-cab diesel ute, real-world consumption of 9.5 litres per 100km, 25,000 kilometres a year. That is 2,375 litres a year.
| Cost line | Impact |
|---|
| The 3 August excise step alone (17.1c/L) | about $406 a year |
| The full swing from April's 20.6c to 53.7c (33.1c/L) | about $786 a year |
| Annual diesel bill at 29 July prices (232.8c/L) | about $5,529 including GST |
| Annual diesel bill if the step passes through in full (about 251.6c/L) | about $5,976 including GST |
For a three-van operation, the excise step alone is about $1,218 a year. For a ten-vehicle fleet it is about $4,061.
Those are not business-ending numbers on their own. The problem is what they land on top of.
The excise story is only half of it. Between 30 June and 29 July 2026, before a single cent of the August step, average retail diesel across the five largest cities went from 173.5 to 232.8 cents a litre. That is a rise of 59.3 cents a litre in one month.
Only 17.6 cents of that was tax. The rest was the international market: the ACCC reports that the weekly average international refined diesel benchmark (Gasoil 10ppm) rose about 41.0 Australian cents a litre over the same period, driven by continuing conflict and disruption in the Middle East.
Average retail diesel by capital city on 29 July 2026, cents per litre:
| City | 30 June | 29 July | Increase |
|---|
| Sydney | 173.6 | 232.9 | 59.3 |
| Melbourne | 174.2 | 236.3 | 62.1 |
| Brisbane | 176.2 | 234.4 | 58.2 |
| Adelaide | 173.9 |
Petrol over the same period went from 151.5 to 193.6 cents across the five largest cities, a rise of 42.1 cents.
Stack the 3 August step on 29 July prices and a work ute is looking at diesel around 251 cents a litre, against 173.5 cents at the end of June. That is a rise of roughly 45% in about five weeks.
For context on how volatile this year has been: diesel on 29 July was still 89.6 cents a litre below where it sat on 31 March, at the peak of the conflict-driven spike.
The ACCC monitors more than 190 regional locations. Between 30 June and 29 July, 190 of them, around 99%, recorded average diesel price increases of more than 17.6 cents a litre, which is the full tax impact of the July step including GST. In New South Wales, Victoria, Queensland, Tasmania and the Northern Territory, every single monitored location cleared that bar.
Seventeen regional locations recorded diesel increases above 63.8 cents a litre:
| Location | State | Diesel increase since 30 June |
|---|
| Euroa | VIC | 78.0c |
| Wangaratta | VIC | 75.3c |
| Dubbo | NSW | 73.2c |
| Blackwater | QLD | 73.0c |
| Moss Vale | NSW |
Aggregate regional prices on 29 July were 235.6 cents for diesel and 198.5 cents for petrol, both above the capital city averages. Regional trades and mobile services also tend to drive more kilometres per job, so the same cents-per-litre rise costs them more in absolute terms.
Here is where the tax side stops helping.
Sole traders and individuals claiming work-related car expenses can use the cents-per-kilometre method. For 2026-27 the ATO rate is 91 cents per kilometre, capped at 5,000 business kilometres. That is a maximum deduction of $4,550 a year.
The rate is meant to cover everything: fuel, registration, insurance, servicing, tyres and depreciation. It is a deliberate simplification, designed so low-kilometre claimants do not have to keep a logbook or receipts.
The trouble is what happens when fuel gets expensive.
At 29 July diesel prices, our ute burns 22.1 cents of fuel per kilometre (9.5 litres per 100km at 232.8 cents). At that rate it consumes the entire $4,550 annual cap on fuel alone at about 20,600 kilometres. Nothing left for registration, compulsory third party, insurance, servicing, tyres or depreciation.
Push diesel to 251.6 cents after the snap-back and fuel costs 23.9 cents per kilometre. The cap is now exhausted on fuel alone at about 19,000 kilometres.
| Diesel price | Fuel cost per km | Kilometres to exhaust the $4,550 cap on fuel alone |
|---|
| 173.5c (30 June) | 16.5c | about 27,600 km |
| 232.8c (29 July) | 22.1c | about 20,600 km |
| 251.6c (after 3 August) | 23.9c | about 19,000 km |
If you are registered for GST you would run this on fuel excluding GST, which moves the post-snap-back crossover to roughly 20,900 kilometres. The direction is the same either way: every rise in fuel prices pulls the crossover point down.
The practical conclusion is simple, and it is worth acting on before you lodge. If you drive more than about 5,000 business kilometres a year, the logbook method will almost certainly beat cents-per-kilometre, and the gap widens every time fuel goes up. The logbook method claims the business-use percentage of your actual costs, with no cap. It costs you one 12-week logbook, which then stays valid for five years.
Two constraints to note. Cents-per-kilometre is only available to individuals and sole traders, so companies and trusts cannot use it at all. And the 5,000 kilometre cap is per car, not per person.
You can compare the two methods on your own numbers with the cents per kilometre calculator and the vehicle running cost calculator.
There is a quiet admission buried in this year's rate.
The 91 cents for 2026-27 is not a single indexed figure. The ATO's determination sets it out as a base rate of 89 cents plus a temporary one-off uplift of 2 cents, and it is explicit that future indexation applies to the 89 cent base, not to the 91.
In other words, the Commissioner looked at the modelled rate, concluded it was not keeping up with what running a car actually costs this year, and bolted an extra 2 cents on as a one-off. The uplift does not carry forward.
That is a reasonable read on what the cents-per-kilometre method is: a low-friction simplification for people who drive occasionally for work, not a genuine cost-recovery mechanism for a business whose vehicle is a tool. If your ute is how you make money, the simplified method is the wrong instrument, and the ATO's own patch is evidence of it.
While you are reviewing vehicle costs, these are the figures that apply from 1 July 2026:
| Threshold | 2026-27 | 2025-26 |
|---|
| Car limit for depreciation | $69,883 | $69,674 |
| Maximum GST credit on a car (1/11th of the car limit) | $6,353 | $6,334 |
| Luxury car tax threshold, fuel-efficient vehicles | $91,661 | |
| Luxury car tax threshold, all other vehicles | $80,809 | |
|
The car limit is the trap most people meet first. Buy a $85,000 dual-cab and you can still only depreciate $69,883 of it, and only claim $6,353 of GST. The rest is simply not deductible. Note that the car limit does not apply to vehicles designed to carry a load of one tonne or more, or nine or more passengers, so genuine one-tonne commercial utes and larger vans can fall outside it. Whether a specific dual-cab qualifies turns on its published payload, which is worth checking against the manufacturer's figure before you sign anything.
- Check whether any of your kilometres are off-road. Light vehicles do earn fuel tax credits off public roads, at the full 53.7 cents from 3 August. Site work, private roads and yard movements all count. Most small operators never split this out.
- If you run anything over 4.5 tonnes, make sure you are actually claiming. The credit is 21.3 cents a litre on public roads from 3 August, and 53.7 cents for fuel powering auxiliary equipment such as a concrete agitator, refrigeration unit or crane, even while the vehicle is on a road.
- Start a logbook now if you drive more than 5,000 business kilometres. Twelve continuous weeks, valid for five years. Starting it in August captures a representative period well before you lodge.
- Reprice your call-out fee. If you quoted your travel charge when diesel was 173 cents and it is heading for 251, that component of every job is now running at a loss. Work out the fuel cost per job, not per year, because that is the number that belongs in your pricing.
- Look at your fuel card discounts and shop around. The ACCC noted a spread of more than 30 cents a litre between the cheapest and dearest sites in some capital cities on a single day. On 2,375 litres a year, 10 cents of that spread is $238.
- Recheck your quote templates and rate cards. Anything with a fixed travel or mileage line written before June needs revisiting.
- Track it properly. If fuel, tolls and vehicle costs are landing on a personal card and getting reconciled months later, you are not going to catch a 45% move in your biggest variable cost until it has already eaten the quarter.
If you are running jobs, quotes and vehicle costs across a few different tools, the job management software and accounting features in OneBookPlus keep vehicle expenses attached to the job that incurred them, so the cost per job is visible while you can still do something about it.
The excise on petrol and diesel is 53.7 cents a litre from 3 August 2026. This is made up of the return of the 16 cent temporary reduction plus 1.1 cents of Consumer Price Index indexation, applied with an indexation factor of 1.020. LPG goes to 17.5 cents a litre, and LNG and CNG to 36.8 cents a kilogram.
The reduced rate applied until 2 August 2026. The full indexed rate applies from 3 August 2026. The cut ran in two stages: a 32 cent reduction from 30 March to 30 June 2026, then a 16 cent reduction from 1 July to 2 August 2026.
The excise rises 17.1 cents a litre, which is about 18.8 cents a litre at the pump once GST is added. Retailers may not pass it through immediately, because sites reprice as they take delivery of new fuel rather than on the day the rate changes. Businesses registered for GST recover the GST portion, so their effective increase is 17.1 cents.
Not for travel on public roads. The ATO does not allow fuel tax credits for fuel used in light vehicles of 4.5 tonnes gross vehicle mass or less travelling on public roads, which covers almost every ute, van and wagon. You can claim for fuel used by those vehicles off public roads, including work sites, mining sites and private roads, at 53.7 cents a litre from 3 August 2026.
For heavy vehicles over 4.5 tonnes travelling on public roads it is 21.3 cents a litre, after the road user charge of 32.4 cents is deducted. For all other business uses, including off-road travel and powering auxiliary equipment, it is 53.7 cents a litre. LPG for off-road business use is 17.5 cents a litre.
91 cents per kilometre, capped at 5,000 business kilometres, giving a maximum deduction of $4,550. The rate is a base of 89 cents plus a temporary one-off uplift of 2 cents for 2026-27 only. Future indexation applies to the 89 cent base. The method is available to individuals and sole traders, not to companies or trusts.
For most people driving more than 5,000 business kilometres a year, yes. Cents per kilometre is capped at $4,550, while the logbook method claims your business-use percentage of actual costs with no cap. At post-snap-back diesel prices, a dual-cab ute doing 9.5 litres per 100km spends the entire $4,550 cap on fuel alone at about 19,000 kilometres, before registration, insurance, servicing, tyres or depreciation. A logbook must run for 12 continuous weeks and is then valid for five years.
$69,883, up from $69,674 in 2025-26. The maximum GST credit on a car is $6,353, being one-eleventh of the car limit. The luxury car tax thresholds for 2026-27 are $91,661 for fuel-efficient vehicles and $80,809 for all others. The car limit does not apply to vehicles designed to carry a load of one tonne or more, or nine or more passengers.
Every figure in this report comes from a primary source, checked on 2 August 2026.
- Excise rates: Australian Taxation Office, Excise duty rates for fuel and petroleum products, last updated 29 July 2026.
- Fuel tax credit rates and the road user charge: Australian Taxation Office, Fuel tax credit rates from 1 July 2026 to 30 June 2027.
- Fuel tax credit eligibility for light vehicles: Australian Taxation Office, Ineligible fuels and activities.
- Retail petrol and diesel prices, capital city and regional: Australian Competition and Consumer Commission, Weekly fuel price monitoring report, Friday 31 July 2026, covering prices to 29 July 2026.
- Cents per kilometre rate: Australian Taxation Office, Cents per Kilometre Deduction Rate for Car Expenses 2026 Determination, published 30 June 2026.
- Car limit, GST credit and luxury car tax thresholds: Australian Taxation Office, Car thresholds from 1 July, published 9 June 2026.
Modelling assumptions. The work vehicle scenario uses a dual-cab diesel ute at 9.5 litres per 100 kilometres of real-world consumption and 25,000 kilometres a year, giving 2,375 litres. Post-snap-back pump prices assume the 17.1 cent excise rise passes through in full plus GST, added to the 29 July average of 232.8 cents, giving about 251.6 cents. Actual pass-through will vary by site and will lag, because retailers reprice as they take new deliveries. Crossover kilometres are calculated on pump prices including GST unless stated otherwise.
What this is not. This report is general information, not tax advice. Fuel tax credit eligibility, the car limit and the choice between deduction methods all turn on facts specific to your business. Check your situation with a registered tax agent before you lodge.
