Luxury Car Tax (LCT) Calculator 2026 (Australia)

How Australia's Luxury Car Tax Works (2025-26)

The Luxury Car Tax (LCT) is a 33% Australian Taxation Office tax on the GST-inclusive value of a car above the LCT threshold. For the 2025-26 financial year (1 July 2025 – 30 June 2026), the ATO indexes two thresholds: $80,567 for fuel-efficient vehicles (combined fuel consumption of 3.5 L/100km or less) and $71,849 for all other cars. LCT is calculated on the amount above the threshold, divided by 1.10 to remove the GST component, then multiplied by 33%. The tax applies to new cars sold by registered dealers and to imported cars based on customs value plus duty.

Last updated: May 2026. Source: Australian Taxation Office (ato.gov.au) — Luxury Car Tax Rate and Thresholds. The 2026-27 thresholds are typically announced by the ATO each May/June after CPI/motor vehicle index review — check the ATO page for the latest indexed amounts before lodging.

Fuel-Efficient vs Standard LCT Threshold — Why It Matters

The fuel-efficient threshold of $80,567 is $8,718 higher than the standard threshold of $71,849, giving buyers of hybrid, plug-in, and electric vehicles a meaningful LCT advantage in 2025-26. To qualify, the vehicle's combined fuel consumption (city + highway) must be 3.5 L/100km or less according to ANCAP or manufacturer specs. On a $90,000 EV, the LCT saved by qualifying for the fuel-efficient threshold is roughly ($80,567 − $71,849) ÷ 1.10 × 33% = $2,615. Most Tesla, BYD, Polestar, and Hyundai Ioniq variants meet this threshold; high-performance hybrid SUVs may not. Always check the manufacturer's official combined fuel consumption figure before assuming the higher threshold applies.

How LCT Is Calculated — Worked Example

The ATO formula is: LCT = (LCT value − threshold) × 10 ÷ 11 × 33%. The "× 10 ÷ 11" step strips out the 10% GST component, because LCT is charged on the ex-GST amount above the threshold, not the GST-inclusive amount. Example: a $90,000 standard car has $90,000 − $71,849 = $18,151 above threshold. Ex-GST excess = $18,151 ÷ 1.10 = $16,501. LCT = $16,501 × 33% = $5,445. Total payable to dealer = $90,000 + $5,445 = $95,445 (LCT is charged on top of the GST-inclusive price). The tool above runs this exact ATO formula.

Who Pays LCT and When

LCT is paid by the supplier (dealer or importer) but is almost always passed on to the buyer at the point of sale. For private importers, LCT is paid to the Department of Home Affairs at customs clearance, alongside import duty (5%) and GST (10%). LCT does not apply to: commercial vehicles designed mainly to carry goods, motorhomes, campervans, vehicles modified for people with disabilities, second-hand cars over two years old, or cars exported by tourists under the Tourist Refund Scheme. Business buyers who use the car 100% for business may be able to claim a partial GST credit but cannot reclaim LCT itself.

LCT Strategies and Common Mistakes

The most common mistake is assuming the threshold is a tax-free allowance — only the amount above the threshold is taxed at 33%, so a $73,000 standard car attracts roughly $345 in LCT, not zero. Another trap is forgetting that LCT is calculated on the GST-inclusive price, so add-ons like floor mats, paint protection, and warranties that show on the dealer invoice can push you across the threshold. EV buyers should request a written confirmation that the fuel-efficient threshold has been applied — some dealers default to the standard threshold and overcharge LCT. If LCT was incorrectly applied, you can request an amendment via the dealer's BAS within four years.