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What the F1 cost cap covers
The cap applies to costs related to operating an F1 team, including developing, manufacturing, testing and racing its cars. The FIA’s 2026 Financial Regulations, Section D, Issue 08, describes a limit on certain costs while leaving teams free to decide how to allocate resources within it.
That distinction matters: the cap is not a ceiling on all of a team’s spending, revenue or financial activity. Teams calculate relevant costs after applying the rulebook’s definitions, exclusions and adjustments. An expense being outside the cap does not mean it is unlimited or exempt from other rules; it means only that it is treated as specified by these financial regulations.
How much is the cost cap in 2026?
For a full-year reporting period with 24 competitions or fewer, the FIA’s 2026 rules set a base cap of US$215 million, subject to indexation. If more than 24 competitions take place, the base increases by US$1.8 million for each competition above 24, also subject to indexation. These figures are the 2026 formula, not a constant for every season or the team’s total unrestricted budget.
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For the 2026 reporting period ending 31 December 2026, the FIA gives illustrative indexed conversions for a period with 24 or fewer competitions:
| Presentation currency | Illustrative 2026 cap | Qualification |
|---|---|---|
| US dollars | US$215 million | Base amount, subject to indexation; 24 competitions or fewer. |
| Pounds sterling | £170.090 million | FIA illustration for the 2026 reporting period ending 31 December 2026; 24 competitions or fewer. |
| Euros | €198.663 million | FIA illustration for the 2026 reporting period ending 31 December 2026; 24 competitions or fewer. |
| Swiss francs | CHF189.992 million | FIA illustration for the 2026 reporting period ending 31 December 2026; 24 competitions or fewer. |
Teams reporting in a different presentation currency must use the conversion method set out in the regulations. The amount relevant to a team therefore depends on the applicable reporting period, the number of competitions, indexation and currency rules. The detailed formula and conversion provisions are in Articles D4.1.2–D4.1.3 of the 2026 FIA Section D regulations.
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Whose costs count?
The calculation is based on a team’s reporting group, not necessarily just the company that carries the team’s name. The team entity is included; if it incurs less than 98% of the costs of its F1 activities, enough additional entities in its legal group are included to capture at least 98% of those costs. The regulations also require certain costs arising elsewhere in the legal group to be recharged into the reporting group or included through related-party adjustments.
In practice, a team cannot determine its cap position simply by checking one company’s accounts. It must identify the relevant activities and entities, apply the required adjustments and report the resulting relevant costs under the rules. These requirements are set out in Articles D4.1–D4.2 of the 2026 FIA regulations.
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What costs are excluded?
Article D5 of the 2026 rules lists excluded costs. The categories below are prominent examples, not a complete list or a substitute for the regulation’s definitions. Some exclusions are conditional, require evidence or allocation, or apply only to the qualifying portion of a shared cost.
| Category | How the rules treat it |
|---|---|
| Marketing | Costs directly attributable to marketing are excluded. |
| Drivers and driver programmes | Compensation, travel and accommodation for F1 drivers are excluded, along with specified costs for other racing drivers and academy programmes. |
| Three eligible highest-paid individuals | Compensation for three eligible highest-paid individuals is excluded subject to the rule’s detailed definitions and exceptions. |
| Heritage activities | Costs attributable to heritage-asset activities are excluded under the applicable provisions. |
| Financing and tax | Finance costs and corporate income tax are excluded. |
| Non-F1 activities | Qualifying costs directly attributable to non-F1 activities are excluded; shared costs require the allocation specified by the rules. |
| Human resources, finance and legal | Costs directly attributable to these activities are excluded. |
| Property | Property costs are among the exclusions defined by the regulations. |
| Employee bonuses | Excluded only up to the lower of 20% of total fixed employee remuneration and the indexed excluded-bonus maximum, plus relevant employer social-security contributions. |
| Specified championship payments | Specified FIA entry and participation payments, driver Super Licence fees, and specified payments to the championship commercial-rights holder are excluded. |
These exclusions do not establish a general pool of unlimited spending. The regulations define what qualifies, require adjustments in some cases, and may limit an exclusion to costs directly attributable to a particular activity. The controlling source is Article D5 of the 2026 FIA Section D regulations.
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How the FIA checks compliance
The FIA Cost Cap Administration administers and monitors the financial rules. Teams must submit the required reporting documentation and retain supporting records. The administration reviews submissions, can request information, may investigate suspected non-compliance and can take enforcement action under the regulations. The FIA describes the regime’s aims as supporting the championship’s long-term viability and encouraging convergence in performance; those are stated objectives, not proof that the cap has produced a measured competitive effect. See the FIA’s Cost Cap Administration page and the current Section D regulations.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What happens if a team breaches the rules?
A procedural breach and an overspend are different things. A team can fail to meet a reporting or other procedural requirement while still reporting relevant costs below the cap. For overspending, the 2026 rules classify an excess of less than 2% of the cap as a minor overspend breach; an excess of 2% or more is a material overspend breach. The applicable classification and process are governed by the reporting year’s rules.
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Procedural or minor overspend cases
Where the rules permit, the Cost Cap Administration may settle eligible procedural or minor overspend cases through an Accepted Breach Agreement. If an adjudication panel finds a minor overspend, it must impose a financial penalty and may also impose minor sporting penalties.
Material overspend cases
An alleged major or material overspend is referred to the Cost Cap Adjudication Panel under the applicable process. A material overspend finding requires a Constructors’ Championship points deduction and a financial penalty; other material sporting penalties may also be imposed. Depending on the breach and decision, the rulebook provides for consequences including testing limits, suspension, exclusion or a reduced future cost cap. The outcome is case-specific: it should not be predicted without the relevant findings and decision.
The current thresholds and procedures are in Articles D8–D10 and possible sanctions are detailed in Articles D10 and D12 of the 2026 FIA regulations.
Why older cost-cap figures and breach thresholds can mislead
The cap, adjustments and overspend thresholds have changed over time, so a figure or threshold should always be tied to its reporting year and regulation version. For example, the FIA’s review published on 11 September 2024 found all ten teams compliant for the 2023 reporting period. That historical review summarized the then-applicable minor and material overspend thresholds as less than and greater than 5%; it is not the threshold for the 2026 rules, which use a 2% dividing line. Read the FIA’s 2023 reporting-period review as a historical finding, not a statement about later seasons.
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