Dealers were advised in May that the Australian Taxation Office (ATO) had announced the Luxury Car Tax (LCT) thresholds for the financial year 2025-26. In addition, due to an amendment to A New Tax System (Luxury car tax) Act 1999, from 1 July 2025, the definition of a fuel-efficient vehicle will change from a fuel consumption rate that does not exceed 7 litres per 100km to 3.5 litres per 100km.
This bulletin is a reminder for dealerships and their staff to familiarise themselves with the implications of the 2025-26 LCT thresholds and the new definition for a fuel-efficient vehicle, which take effect from 1 July 2025. Dealers are encouraged to consider seeking appropriate professional taxation advice from their preferred taxation and/or professional services firm.
The bulletin in May advised that the vehicle consumer price index (CPI) indexation factor for the 2025-26 financial year is 0.997. Therefore, the car limit and the luxury car tax threshold for both fuel-efficient vehicles and other vehicles remain unchanged.
| LCT Thresholds | ||
| Financial year | Fuel efficient vehicles | Other vehicles |
| 2025-26 | $91,387 | $80,567 |
| 2024-25 | $91,387 | $80,567 |
| 2023-24 | $89,332 | $76,950 |
More information on the LCT thresholds and calculation of the LCT can be found on the ATO website.