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Luxury Car Tax Threshold 2026-27 and LCT Calculator

For cars sold or imported in 2026-27 the luxury car tax threshold is $80 809, or $91 661 for a fuel-efficient car using 3.5 L/100 km or less, which includes every battery electric car. Luxury car tax is 33% of the part of the price above the threshold, after taking the GST out of that part: (LCT value − threshold) × 10/11 × 33%. The ATO's worked example is a car sold for $88 000 including GST that is not fuel-efficient, which carries $2 157.30 of LCT. For anyone looking at a novated lease the fuel-efficient threshold matters twice: it sets the LCT on the car, and an electric car whose price at first retail sale reached it can never get the FBT exemption. Enter a price below to see the tax and which side of the line you are on.

Luxury car tax on a car price

Luxury car tax

$4 257.30

Threshold applied$80 809
Value above the threshold$14 191
× 10/11 × 33%$4 257.30
Price with LCT, before on-road costs$99 257.30

By Radif Partners

Publisher of calculators and practical guides · Finance Enthusiast

Updated for 2026-27 financial year · Last verified 2026-07-01

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Thresholds by financial year

Financial yearFuel-efficient carsOther cars
2026-27$91 661$80 809
2025-26$91 387$80 567
2024-25$91 387$80 567
2023-24$89 332$76 950
2022-23$84 916$71 849

The threshold that applies is the one for the year the car is sold, imported or acquired. From 1 July 2025 the two thresholds are indexed at the same rate, and the definition of a fuel-efficient car tightened from 7 to 3.5 L/100 km, under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025.

The same price, two results

A $105 000 electric car is fuel-efficient: $13 339 above $91 661, so $4 001.70 of LCT. A $105 000 petrol SUV is measured against $80 809: $24 191 above, so $7 257.30. The gap between the two thresholds is worth up to $3 255.60 on any car above both.

What counts in the LCT value

The dealer, as the seller, reports and pays the LCT on its BAS and builds it into the price you pay. In the ATO example the customer pays $90 157.30 before stamp duty, CTP and registration.

The line that decides the electric car exemption

For the novated lease FBT exemption, the question is not whether LCT was paid but whether the car's value at its first retail sale was below the fuel-efficient threshold of that year. A $91 500 electric car first sold in 2026-27 is under $91 661 and qualifies; the same car first sold in 2025-26 was above $91 387 and never will. Check a specific car on the EV FBT exemption page, then run the lease on the novated lease calculator.

Buying a car through a novated lease above the threshold

A novated lease does not avoid luxury car tax: it is paid on the car, by the dealer on the sale or by the financier when it leases the car out, and it ends up in the amount the lease is written on. For a petrol car the FBT base value includes the LCT as well, because base value is the cost price including GST and luxury car tax. That has two effects. The after-tax employee contribution under the employee contribution method, 20% of base value, rises with the LCT. And a battery electric car that ends up above $91 661 once options are added loses the FBT exemption entirely, which can cost far more than the LCT itself. Run both the LCT and the lease on the actual quote, including dealer-fitted accessories, before signing.

Who does not pay luxury car tax

The ATO lists the supplies where LCT does not apply: emergency vehicles such as ambulances, fire-fighting and police vehicles; motor homes and campervans; commercial vehicles designed mainly to carry goods; modifications for people with a disability; cars exported GST-free; a car not imported and manufactured more than two years before the supply, or imported more than two years before it; and sales to a buyer who quotes an ABN in the approved format, typically a dealer buying stock. Eligible primary producers and tourism operators can claim a partial refund on certain four-wheel or all-wheel drive vehicles. None of this changes the FBT test for electric cars.

Sources

Frequently Asked Questions

What is the LCT threshold for 2026-27?
$80 809 for most cars and $91 661 for fuel-efficient cars, those using 3.5 L/100 km or less on the combined cycle. Both are GST-inclusive and apply to cars sold or imported between 1 July 2026 and 30 June 2027. In 2025-26 they were $80 567 and $91 387; the indexation factor for 2026-27 was 1.003.
How is luxury car tax calculated?
Take the LCT value, which is the price including GST but excluding LCT, registration and stamp duty, subtract the threshold, multiply by 10/11 to remove the GST and then by 33%. The ATO's example is an $88 000 car that is not fuel-efficient: $7 191 over the threshold gives $2 157.30 of LCT.
Are hybrids fuel-efficient for luxury car tax?
Since 1 July 2025 only cars using no more than 3.5 L/100 km qualify, so most conventional hybrids now fall under the general threshold of $80 809. Before that date the limit was 7 L/100 km and many hybrids qualified. Battery electric cars always meet the test, and most plug-in hybrids do on their official combined figure.
Why does the LCT threshold matter for a novated lease?
It decides the electric car FBT exemption. A battery electric car whose value at its first retail sale reached the fuel-efficient threshold, $91 661 for a car first sold in 2026-27, can never be FBT exempt, even second-hand. Below it, the whole lease can be paid from pre-tax salary without FBT.

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