How Luxury Car Tax Is Calculated in Australia
How it works
Luxury Car Tax (LCT) is a 33% tax on the GST-exclusive amount by which a car's GST-inclusive LCT value exceeds the threshold. For 2026–27, the standard threshold is $80,809 and the fuel-efficient threshold is $91,661. LCT sits on top of GST, but the formula removes GST from the excess before applying the 33% rate: (LCT value − threshold) × 10 ÷ 11 × 33%.
The same statutory formula applies regardless of whether the eventual buyer is GST-registered. LCT is generally reported and paid by the business that sells or imports the car, and is usually built into the final price passed on to the buyer.
For directly imported vehicles, Australian Border Force assesses LCT at the point of importation using the customs value plus transport, insurance, customs duty and GST. Thresholds are indexed annually; the standard threshold is $80,809 for 2026–27.
When to use this calculator
- You're buying a new or used car with an LCT value above the threshold and want to estimate the LCT payable
- You want to compare the total tax burden (GST + LCT) on a standard vehicle versus a fuel-efficient or electric vehicle
- You're a car seller or importer estimating the LCT payable on a taxable sale or importation
- You're importing a vehicle and need to estimate the LCT that Australian Border Force will charge at the border
- You want to see how much you'd save by choosing a vehicle just below the threshold versus one just above
Key concepts
- LCT threshold (standard)
- For 2026–27, the standard LCT threshold is $80,809 (GST-inclusive). Cars with an LCT value at or below this amount attract no LCT. Above it, the GST-exclusive excess is taxed at 33%.
- Fuel-efficient vehicle threshold
- Vehicles rated at 3.5 litres per 100km or less qualify for the higher $91,661 threshold in 2026–27. The definition tightened from 7 L/100km on 1 July 2025. The 2026–27 fuel-efficient threshold is $10,852 above the standard threshold.
- GST-exclusive excess
- The formula multiplies the amount above the threshold by 10/11 before applying 33%, removing the GST component. This is part of the LCT formula and does not depend on the buyer's GST-registration status.
- Exempt vehicles
- Several vehicle categories are exempt from LCT: emergency vehicles (ambulance, fire, police), vehicles modified for people with disabilities, motorhomes and campervans, and commercial vehicles designed to carry loads of 1 tonne or more (above GVM 3.5t) or 9+ passengers. Two-door utes and vehicles primarily designed for carrying goods rather than passengers may also be exempt.
Worked example — Buying a $120,000 SUV (standard vs fuel-efficient)
Alex is considering two vehicles, both with an LCT value of $120,000 (including GST but before LCT). He is not GST-registered.
Vehicle A — Standard petrol SUV (9.2L/100km):
| Component | Calculation | Amount |
|---|---|---|
| LCT threshold (standard) | — | $80,809 |
| Excess above threshold | $120,000 − $80,809 | $39,191 |
| GST-exclusive excess | $39,191 × 10 ÷ 11 | $35,628 |
| LCT (33%) | $35,628 × 0.33 | $11,757 |
| GST (in original price) | $120,000 ÷ 11 | $10,909 |
| Total tax (GST + LCT) | $22,666 |
Vehicle B — Electric vehicle (0L/100km, fuel-efficient):
| Component | Calculation | Amount |
|---|---|---|
| LCT threshold (fuel-efficient) | — | $91,661 |
| Excess above threshold | $120,000 − $91,661 | $28,339 |
| GST-exclusive excess | $28,339 × 10 ÷ 11 | $25,763 |
| LCT (33%) | $25,763 × 0.33 | $8,502 |
| GST (in original price) | $120,000 ÷ 11 | $10,909 |
| Total tax (GST + LCT) | $19,411 |
LCT difference for the fuel-efficient vehicle: $3,256
At the same pre-LCT value, the fuel-efficient vehicle carries $3,256 less LCT because of the higher threshold. The calculation already removes GST from the excess for both vehicles.