On 24 April 2026, across Australia, the luxury car tax remains one of the most misunderstood federal imposts on high-value vehicle purchases. Whether you are buying a German sedan, an American muscle car, or a Japanese supercar, understanding the Australian luxury car tax (LCT) rules is essential to budgeting correctly.
What Is Luxury Car Tax in Australia?
The luxury car tax is a federal tax imposed on new vehicles that exceed a defined price threshold. It applies to the purchase price including GST, and is calculated at 33% of the amount above the threshold. The ATO administers the tax, and it applies regardless of whether you buy from a dealership, importer, or private seller.
The LCT was introduced to discourage luxury spending and ensure that higher-value vehicles contribute more to tax revenue. It operates in addition to the Goods and Services Tax (GST) and state-based stamp duty.
2026 Luxury Car Tax Threshold
The ATO sets the luxury car tax threshold annually. For the 2025-26 financial year:
- Fuel-powered vehicles: AUD 89,332 threshold
- Electric vehicles: AUD 91,316 threshold (higher since July 2022)
The EV threshold was increased specifically to encourage the adoption of zero-emission luxury vehicles, making EVs slightly more competitive against high-end petrol vehicles in terms of total cost.
How to Calculate Luxury Car Tax
The LCT calculation is straightforward once you know the vehicle price and applicable threshold. Use this formula:
Luxury Car Tax = (Purchase Price - Threshold) x 33%
Example calculation for a AUD 130,000 petrol vehicle:
- Purchase price: AUD 130,000
- Threshold: AUD 89,332
- Above threshold: AUD 40,668
- LCT: AUD 40,668 x 33% = AUD 13,420.44
This LCT amount is on top of the AUD 13,000 GST already included in the AUD 130,000 price. The total tax burden on this vehicle before registration is substantial.
Who Must Pay LCT?
LCT applies when you purchase a new vehicle in Australia if ALL of the following are true:
- Vehicle is new (under 2 years old at time of purchase)
- Vehicle price exceeds the threshold for your vehicle type
- Vehicle is not a qualifying commercial vehicle or primary production vehicle
- Vehicle was purchased in Australia
Importers of new vehicles also pay LCT at the time of import, and the LCT is calculated on the customs value plus shipping and insurance costs.
LCT Exemptions and Concessions
Not all high-value vehicles attract LCT. Key exemptions include:
- Commercial vehicles with GVM over 3,500kg: SUVs, utes, and trucks used primarily for commercial purposes
- Primary production vehicles: Vehicles used directly in primary production (farming, mining) may be exempt
- Vehicles over 2 years old: The 2-year rule means used luxury vehicles do not attract LCT
- Charitable donations: Luxury vehicles donated to DGR-certified charities may be exempt
LCT vs GST — Understanding the Relationship
LCT is calculated on the GST-inclusive price of the vehicle. GST at 10% is applied first, then LCT is calculated on the total including GST. This means the effective tax rate on luxury vehicles is higher than it appears, since both GST and LCT compound on the base price.
For a AUD 100,000 vehicle above threshold:
- GST (10%): AUD 10,000
- LCT on AUD 10,668 above threshold at 33%: AUD 3,520.44
- Total tax: AUD 13,520.44 on a AUD 100,000 vehicle
State Stamp Duty — Additional Cost
Luxury car tax is separate from state stamp duty. Each Australian state and territory charges stamp duty on vehicle transfers, with rates varying from around 1.5% to 5% depending on the state and vehicle value. High-value vehicles attract stamp duty based on their declared value, adding further cost.
When budgeting for a luxury vehicle, always calculate:
- GST (10% of pre-GST price)
- LCT (33% of amount above threshold)
- Stamp duty (state-specific percentage)
- Registration and transfer fees
Summary
Luxury car tax in Australia applies a 33% rate on the GST-inclusive price above the threshold. For fuel vehicles the threshold is AUD 89,332, while electric vehicles have a slightly higher threshold of AUD 91,316. Understanding the total tax burden helps you make informed decisions when purchasing a luxury vehicle in Australia.