Budget 2026: What you need to know about the PARF rebate

SINGAPORE – The rebate that car owners get for deregistering their vehicles before their certificates of entitlement (COEs) expire will be lowered.

Prime Minister and Finance Minister Lawrence Wong announced in his Budget 2026 speech on Feb 12 that the preferential additional registration fee (PARF) rebate will be lowered by 45 percentage points.

The maximum rebate a car owner can receive will be

halved from

Here is what you need to know about the PARF rebate:

What is it?

The PARF rebate, which applies to cars and taxis, is the amount car owners receive for deregistering their vehicles by the 10-year mark. Thereafter, there is no PARF rebate.

What is its purpose?

PARF was introduced in 1975 to encourage the early deregistration of older, more polluting cars and to maintain a younger vehicle population.

The earlier car owners deregister vehicles before the 10-year COE expires, the higher the rebate.

How is the rebate calculated?

The PARF rebate is calculated as a percentage of the additional registration fee (ARF) a car owner has paid and varies according to the car’s age.

ARF is a tax paid based on a car’s open market value – the approximate cost of a car before taxes.

The more expensive a car, the higher its ARF.

Why the latest changes?

The PARF rebate is intended to discourage the use of older, more polluting vehicles on Singapore’s roads.

Electric vehicles, which are considered less polluting, are becoming more common in Singapore.

Therefore, there is less need to encourage early deregistration through PARF rebates, PM Wong said.

Who are affected?

The revised PARF rebate amount will be 30 per cent of ARF for cars that are not more than five years old at the time of deregistration. This is down from 75 per cent of ARF now.

For cars that are above five and up to six years old, the rebate falls from 70 per cent of ARF to 25 per cent of ARF.

For cars that are in the final year of their 10-year COE, the PARF rebate will be reduced to 5 per cent of the original ARF paid – down from 50 per cent now.

The changes will take effect from the next COE bidding exercise, which closes on Feb 20.

For cars that do not need a COE for registration, including taxis, the lower PARF rebate will apply to those registered from Feb 13, the Land Transport Authority (LTA) said.

The changes to the PARF rebate do not apply to vehicles such as vans and classic cars.

The additional revenue from the tighter PARF rebates will go towards government funding to benefit the wider public, including providing everyone with high-quality and affordable transport, LTA said.

Observers noted that the rebate reduction will increase the level of depreciation for cars that incur higher ARF and is likely to dampen demand for such models.

PARF was last adjusted at the 2023 Budget, when the rebate was capped at $60,000. The Government also increased ARF taxes on higher-end cars at that time.