Motorists in Victoria could save almost $400 a year on their driving costs under a cost-of-living rebate in the Allan Labor government’s 2026/27 budget.

In a move designed to buffer the impact of soaring fuel prices linked to ongoing conflict in the Middle East, Premier Jacinta Allan has announced a 20% rebate on light vehicle registration.

With annual registration fees for standard vehicles costing as much as $930.70, a single-car owner stands to receive $186, while a two-car family could see up to $372 returned to their pocket.

The scheme only applies to personal-use vehicles under 4.5 tonnes, including cars and utes. The rebate will be backdated to cover registration payments made for the 2025/26 period, but Victorians will only have a two-month window from 1 June to 31 July to apply.

Car owners can only claim the rebate for a maximum of two vehicles registered under their name

The state government estimates the scheme will cost $750m, with Allan saying the state would absorb the cost but still maintain a budget surplus.

Victorians have already seen the announcement of free and half-price public transport schemes, and the announcement of the rego discount is expected to ignite fresh criticism against the NSW premier, Chris Minns, from his state’s opposition, which is calling on him to cut to the fuel excise and provide free public transport over long weekends to ease the pain at NSW bowsers.