The luxury car tax thresholds moved on 1 July 2026. If you are buying near the line, or buying a used electric car, the number matters more than it looks.
- Fuel-efficient vehicles
- $91,661
- All other vehicles
- $80,809
- LCT rate
- 33% of the amount over
- Applies from
- 2026-27 financial year
What changed
The ATO's published luxury car tax rate and thresholds list the 2026-27 thresholds as $91,661 for fuel-efficient vehicles and $80,809 for other vehicles, against $91,387 and $80,567 in 2025-26. The ATO gives the indexation factor for 2026-27 as 1.003.
The rate itself is unchanged. The ATO states that cars with an LCT value over the threshold attract an LCT rate of 33%, and that you only pay LCT on the amount that is over the threshold — so a car $5,000 above the line attracts the tax on that $5,000, not on the whole price.
The thresholds are also not static in their definitions. The same page records that from 1 July 2025, under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025, the definition of a fuel-efficient vehicle changed and the indexation rates for the two thresholds were aligned. That is why the gap between them narrows rather than widens.
What it means if you're buying or selling
For a new car, the threshold is the point where the price stops tracking the sticker. Two cars a few thousand dollars apart on either side of the line can be further apart than they look once the tax lands, which is worth knowing before you negotiate on a car advertised close to it.
Second-hand, there is a trap that catches people. The ATO's electric cars exemption rules say an electric car is only eligible for the FBT exemption if luxury car tax has never been payable on it — the ATO states the value must be below the fuel-efficient threshold at the time it is first sold in a retail sale and in any subsequent sale. A used EV that was over the threshold when it was new does not become eligible later because its second-hand price has fallen.
If you are buying a used electric car to salary package, check what it sold for new, not what you are paying now. The ATO's own worked example turns on the price at first retail sale.
The threshold in force is the one for the financial year the car was imported, acquired or sold, so a car bought in June and a car bought in July sit against different numbers.