Luxury Car Tax Threshold Increase – 2026–27 (Australia)

From 1 July 2026, the Australian Government will increase the Luxury Car Tax (LCT) thresholds for the 2026–27 financial year.

The updated thresholds are:

• $91,661 for fuel-efficient vehicles
• $80,809 for all other vehicles
• $69,883 car limit threshold (for depreciation purposes)

This represents a small CPI-indexed adjustment designed to reflect ongoing vehicle price increases in the Australian market.

What this means for businesses and car buyers

Luxury Car Tax applies at 33% on the value of a vehicle above the relevant threshold, meaning any portion of the car price exceeding the limit is subject to additional tax.

For example:

• Fuel-efficient vehicles (typically under 3.5L/100km) benefit from the higher threshold of $91,661
• Standard vehicles are taxed once they exceed $80,809

These thresholds are used by the ATO to determine LCT liability for new and imported vehicles.

The 2026–27 increase is modest, but it may provide slight relief for buyers of higher-value vehicles and electric cars, where pricing often sits close to the threshold.