The São Paulo State Government is advancing sustainable mobility initiatives with the recent approval of Bill No. 1510/2023 by the Legislative Assembly. The proposal grants a two-year IPVA (Tax on Motor Vehicle Ownership) exemption for light hybrid vehicles from January 1, 2025, to December 31, 2026.
Exemption Rules
The exemption applies to hybrid vehicles that meet the following criteria:
- Equipped with a combustion engine powered exclusively by ethanol or flex-fuel technology;
- Valued at a maximum of BRL 250,000.
After the initial exemption period, the IPVA rate will be reinstated progressively as follows:
- 1% in 2027;
- 2% in 2028;
- 3% in 2029;
- 4% from 2030 onward.
The measure now awaits Governor Tarcísio de Freitas’s approval and is expected to bring significant benefits to consumers and the automotive sector.
Additional Benefits of the Proposal
In addition to light hybrid vehicles, the bill includes an IPVA exemption from 2025 to 2029 for buses and trucks powered exclusively by hydrogen or natural gas, including biomethane.
Objectives and Justifications
The State Government justified the measure as a way to:
- Encourage the adoption of technologies that reduce greenhouse gas emissions;
- Promote new investments in the production of vehicles powered by clean and renewable energy in the state;
- Stimulate job creation, particularly with recent investments, such as the BRL 11 billion project by a car manufacturer in Sorocaba, expected to generate thousands of jobs.
Debates in the Legislative Assembly
Although approved by a large majority, the measure sparked debate. Supporters emphasized the importance of the initiative in reducing taxes and boosting economic development. Critics, however, pointed out the exclusion of fully electric vehicles as a shortfall, considering the global energy transition and the potential of these models to significantly reduce carbon emissions.