What is the F1 cost cap and why has it gone up?

Formula 1 has overhauled its cost cap regulations for 2026, increasing the budget limit to $215 million. While this appears to be a significant rise from the previous $135 million base, the adjustment is largely neutral when accounting for the incorporation of previously separate expenses, such as annual depreciation costs and the full integration of personnel time allocation for F1 projects. The cost cap, introduced in 2021 to ensure long-term financial sustainability and competitive balance, excludes specific items like driver salaries, the pay of the top three highest-earning staff, and sustainability initiatives. The updated 2026 rules also aim to simplify compliance while offering new, targeted exclusions for health, safety, and catering costs to ensure the framework remains practical for all teams. Simultaneously, the power unit cost cap will increase to $190 million in 2026 to cover the R&D and operational costs of the new engine regulations. To maintain competitive parity, the FIA has introduced the 'Additional Development and Upgrade Opportunities' (ADUO) mechanism, allowing manufacturers trailing in performance to utilize specific financial and technical allowances to close the gap.