How Luxury Car Tax Is Calculated in Australia
How it works
Luxury Car Tax (LCT) is a 33% tax on the amount by which a car's GST-inclusive value exceeds the luxury car tax threshold. For 2025–26, the standard threshold is $80,567 and the fuel-efficient threshold is $89,332. LCT sits on top of GST — so a car above the threshold is subject to both 10% GST and 33% LCT on the excess.
The formula differs depending on whether the buyer is GST-registered. For non-registered buyers, LCT is 33% of (the GST-inclusive price minus the threshold). For GST-registered buyers, the calculation removes the GST component first: LCT = 33% × (price − threshold) ÷ 1.1. This reduces LCT for registered buyers because the tax is calculated on the GST-exclusive excess rather than the inclusive excess.
LCT is technically paid by the seller or importer, but in practice it's built into the sticker price and passed on to the buyer. For directly imported vehicles, Australian Border Force assesses the LCT at the point of importation, based on the customs value plus insurance, freight, and any customs duty. The thresholds are indexed annually and have been rising steadily — the standard threshold was $57,466 in 2010 and has increased to $80,567 in 2025–26.
When to use this calculator
- You're buying a new or used car priced above the LCT threshold and want to see how much LCT is included in the price
- You want to compare the total tax burden (GST + LCT) on a standard vehicle versus a fuel-efficient or electric vehicle
- You're a GST-registered business purchasing a vehicle and want to calculate the reduced LCT amount
- 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 2025–26, the standard LCT threshold is $80,567 (GST-inclusive). Vehicles priced at or below this amount attract no LCT. Above this amount, the excess is taxed at 33%. The threshold is indexed annually based on motor vehicle price movements.
- Fuel-efficient vehicle threshold
- Vehicles with a fuel consumption rating of 7 litres per 100km or less qualify for the higher threshold of $89,332 (2025–26). This includes battery electric vehicles, most plug-in hybrids, and some highly efficient petrol/diesel cars. The higher threshold means fuel-efficient vehicles can be priced up to $8,765 more than the standard threshold before LCT kicks in.
- GST-registered buyer adjustment
- If the buyer is GST-registered, the LCT formula divides the excess above the threshold by 1.1 before applying the 33% rate. This effectively removes the GST component from the LCT calculation. On an $120,000 car (standard threshold), a non-registered buyer pays LCT on the full $39,433 excess, while a registered buyer pays LCT on $35,848 (the GST-exclusive excess).
- 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 a sticker price of $120,000 (inc-GST and LCT). He is not GST-registered.
Vehicle A — Standard petrol SUV (9.2L/100km):
| Component | Calculation | Amount |
|---|---|---|
| LCT threshold (standard) | — | $80,567 |
| Excess above threshold | $120,000 − $80,567 | $39,433 |
| LCT (33%) | $39,433 × 0.33 | $13,013 |
| GST (in original price) | $120,000 ÷ 11 | $10,909 |
| Total tax (GST + LCT) | $23,922 |
Vehicle B — Hybrid SUV (6.5L/100km, fuel-efficient):
| Component | Calculation | Amount |
|---|---|---|
| LCT threshold (fuel-efficient) | — | $89,332 |
| Excess above threshold | $120,000 − $89,332 | $30,668 |
| LCT (33%) | $30,668 × 0.33 | $10,120 |
| GST (in original price) | $120,000 ÷ 11 | $10,909 |
| Total tax (GST + LCT) | $21,029 |
LCT saving with fuel-efficient vehicle: $2,893
At the same sticker price, the fuel-efficient vehicle carries $2,893 less LCT because of the higher threshold. If Alex were GST-registered, the LCT on Vehicle A would drop further to $11,830 (dividing the excess by 1.1 before applying 33%), saving an additional $1,183.