Luxury car tax thresholds increased

The Luxury Car Tax (LCT) threshold has been raised to $80,567 for the new financial year, with the LCT threshold for fuel-efficient vehicles also increasing to $91,387 from July 1.

Theoretically, this should lead to some mild reductions in the sticker prices of vehicles costing between $76,950 and $80,567 – or $89,332 and $91,387 if they use less than 7.0L/100km.

That’s because the controversial LCT essentially adds 33c to every dollar that a vehicle is priced above the threshold, but there’s no guarantee all of the savings will be passed on to customers by car companies, which may instead choose to offset some or all of them with price increases.

This year’s LCT threshold increases are nowhere near as big as the ones applied for the 2023/24 financial year, but they are still up there compared to previous years as inflation continues make life tough for new-vehicle consumers in pretty much every market segment.

Big-name models that are now exempt from the LCT include the Ford Mustang GT, Audi S3, Hyundai Palisade Calligraphy AWD, Lexus NX 350 AWD F Sport and Alfa Romeo Stelvio Ti.

The only newly-exempt ‘fuel-efficient’ vehicles, meantime, are the Audi Q5 40TDI quattro and Lexus RX 350h Luxury 2WD.

With the government trying to stimulate the uptake of greener and battery-electric vehicles nationally, this will be the final 12 months of the threshold for ‘fuel-efficient vehicles’ being 7.0L/100km.

As of July 1, 2025, the threshold will plummet to just 3.5L/100km following the implementation of the federal government’s New Vehicle Efficiency Standard (NVES) from January 1, slashing the number of exempt vehicles and thereby driving up the retail prices of dozens of models.

LCT thresholds

* Data sourced from ATO

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