For the 2025–26 financial year, the electric vehicle luxury car tax threshold in Australia is $91,387. A fully electric car qualifies for this higher fuel-efficient threshold because its fuel consumption is zero, and luxury car tax (LCT) at a flat 33% only applies to the GST-inclusive value above that figure.1Australian Taxation Office. Luxury Car Tax Rate and Thresholds
The Two Thresholds for 2025–26
The Australian Taxation Office sets two LCT thresholds each financial year. For 2025–26, both are unchanged from the prior year because the indexation factor came in below 1, and the thresholds hold steady rather than decrease in that situation.
- Fuel-efficient vehicles: $91,387
- All other vehicles: $80,567
Anything above the applicable threshold attracts LCT at 33%. EVs fall on the fuel-efficient side of the line, so the $91,387 figure is the one that matters when you’re pricing an electric car.
Why the Fuel-Efficient Definition Changed on 1 July 2025
Before 1 July 2025, a car counted as fuel-efficient for LCT purposes if its combined fuel consumption rating was 7 litres per 100 kilometres or less. From 1 July 2025, that limit was halved to 3.5 litres per 100 kilometres under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025.2Australian Taxation Office. Definitions – Luxury Car Tax
For a pure EV, nothing changes in practice. Zero fuel consumption sits comfortably under the new 3.5-litre limit, so battery electrics keep the $91,387 threshold. The buyers hit by the change are those looking at plug-in hybrids or conventional hybrids that used to fall between 3.5 and 7 litres per 100 kilometres. Those vehicles now sit under the lower $80,567 threshold, which can add thousands of dollars in LCT on a premium model.
The classification uses the laboratory-tested combined rating shown on the vehicle’s compliance plate under the Road Vehicle Standards Act 2018, not real-world consumption. The same legislation also aligned the indexation method for both thresholds, so they will move together in future years.1Australian Taxation Office. Luxury Car Tax Rate and Thresholds
What Counts Toward the LCT Value of an EV
Whether your EV crosses $91,387 depends on its LCT value, which is broader than the drive-away price you might see in an ad. The LCT value includes:
- GST and any customs duty on the vehicle
- Dealer delivery charges
- Standard and statutory warranties
- Accessories, modifications, and treatments supplied at or before delivery, such as upgraded wheels, premium audio, or paint protection
- Fleet rebates and incentive payments that count as third-party consideration
Several common costs are excluded:3Australian Taxation Office. Working Out the LCT on a Sale
- Stamp duty, transfer fees, and registration
- Compulsory third-party insurance
- Extended warranties beyond standard coverage
- Financing costs
- Service plans
- Disability modifications made solely to adapt the car for driving by or transporting a person with a disability
This matters more than most buyers expect. A base EV listed just under $91,387 can easily cross the threshold once dealer-fitted accessories are added. If you’re shopping close to the line, ask for an itemised breakdown showing which costs form part of the LCT value and which don’t.
How to Calculate LCT on an Electric Car
The formula is the same whether you buy from a dealer or import directly:
(LCT value − LCT threshold) × 10 ÷ 11 × 33%3Australian Taxation Office. Working Out the LCT on a Sale
The 10 ÷ 11 step strips out the GST already embedded in the excess so LCT isn’t stacked on top of GST. Here is a worked example for an EV with an LCT value of $110,000:
- Subtract the fuel-efficient threshold: $110,000 − $91,387 = $18,613
- Remove the GST component: $18,613 × 10 ÷ 11 = $16,921
- Apply the 33% rate: $16,921 × 0.33 = $5,584
That $5,584 is the LCT payable. If the same vehicle were a plug-in hybrid that no longer meets the 3.5-litre definition, the standard $80,567 threshold would apply and the LCT bill would rise to $8,829. The threshold difference alone costs the buyer more than $3,200 in extra tax on a $110,000 car.4Australian Taxation Office. Working Out the LCT on an Import
Dealers build LCT into the contract price, so you rarely have to calculate it yourself. Running the numbers is still worthwhile at negotiation. If accessories pushed the LCT value over the threshold, dropping an option pack can sometimes bring the car back under $91,387 entirely and remove the tax altogether.
When LCT Does Not Apply
Some categories of vehicles and transactions sit outside LCT regardless of value:
- Commercial vehicles designed mainly for carrying goods rather than passengers
- Emergency vehicles registered as ambulances, firefighting, police, or search and rescue vehicles
- Motor homes and campervans
- Cars exported as GST-free supplies
- Cars manufactured or imported more than two years before the sale
- Sales where the buyer quotes a valid ABN in the approved format, in which case the buyer self-assesses the LCT obligation
- Display vehicles acquired by endorsed public institutions such as museums or galleries solely for public exhibition
For an EV buyer, the practical takeaway is that most passenger electric cars will not fit any of these exemptions, so if the LCT value exceeds $91,387, LCT is payable.5Australian Taxation Office. When Luxury Car Tax Doesn’t Apply Domestic private sales between individuals generally do not trigger a fresh LCT obligation, and if a dealer sells a second-hand luxury car that already had LCT paid, the LCT on the new sale may be reduced by the amount previously payable so the same vehicle isn’t fully taxed twice.6Australian Taxation Office. Luxury Car Tax (LCT)