Luxury Car Tax on a vehicle purchase.
Luxury Car Tax
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Threshold applied
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Total cost incl LCT
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The tax that catches buyers off guard at the dealership
Luxury Car Tax is one of the few taxes most people only meet at the point of sale, usually folded silently into a drive-away price. It is a federal tax, collected by the ATO, that sits on top of GST whenever a vehicle's value crosses a threshold set each year. For 2025-26 the general threshold is $80,567 and the fuel-efficient threshold is $91,387. Cross either line and you pay 33 percent, but only on the part of the value that sits above it, and only on the GST-exclusive slice of that excess. That two-step adjustment is exactly what trips people up, so this tool does it for you and shows the threshold it applied.
Why the tax is smaller than 33 percent of the overshoot
People see the 33 percent headline and assume a $30,000 overshoot means a $9,900 bill. It does not, because the threshold and the price are both GST-inclusive figures, and LCT is designed to apply to value, not to the GST already baked into that value. So the calculator strips the GST out of the excess first, multiplying it by ten elevenths, and only then applies the 33 percent rate. The practical effect is that your true LCT runs closer to 30 percent of the raw overshoot. It is a quiet saving, but on an expensive car it is worth a few thousand dollars, which is why getting the mechanics right matters.
A $110,000 standard car, step by step
Take a $110,000 petrol SUV, GST inclusive, bought by a private buyer. It is a standard vehicle, so the $80,567 threshold applies. The excess is $29,433. Strip the GST and you get $26,757. Apply 33 percent and the Luxury Car Tax comes to $8,830, lifting the total to $118,830. Here is the chain the tool runs internally.
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The fuel-efficient threshold, and why it is closing
Switch the vehicle type to fuel-efficient and the threshold jumps to $91,387, so a far larger chunk of the price escapes the tax. The definition of fuel-efficient has tightened over the years, and from mid 2025 the fuel-consumption limit dropped to 3.5 litres per 100 kilometres, which now excludes a number of plug-in hybrids that previously qualified. The lesson for buyers is simple: never assume a car is fuel-efficient for LCT purposes just because it sips fuel by everyday standards. Check the official combined-cycle figure before you bank on the higher threshold.
Who actually pays it, and a refund worth knowing
This calculator is built for private buyers and small-business owners pricing a high-end car, and for anyone trying to reverse-engineer a drive-away quote. A practical tip from the field: if you run a primary production business or a tourism operator, you may be able to claim an LCT refund of up to a capped amount on eligible four-wheel drives and similar vehicles, so do not assume the tax is always final. The common mistake I see is people negotiating hard on the base price while ignoring that every extra dollar above the threshold drags 33 percent of LCT with it. Trimming optional extras to slip under the threshold can save more than the extras are worth.
Does LCT apply to second-hand cars?
It can, but only if the car is less than two years old and is being sold by a registered dealer for more than the threshold. A genuinely used car sold privately between two individuals does not attract fresh LCT, because the tax was already paid when the vehicle first crossed the threshold new.
Is the LCT itself subject to GST?
No. GST and LCT are calculated on the same underlying value but they are not stacked on each other. That is the whole reason the calculator works on the GST-exclusive portion of the excess, so you are never taxed twice on the same slice of price.