Luxury Car Tax Thresholds Rise for 2026–27: What It Means for Your Next Car Loan

The general Luxury Car Tax threshold has risen to $80,809, while the higher threshold for fuel-efficient vehicles has moved to $91,661. Luxury Car Tax is charged at 33 per cent on the value of a vehicle above the relevant threshold, and while it is usually handled by the seller or importer, it can flow through to the price a buyer sees on the contract.

For everyday borrowers, this is not just a tax technicality. If you are considering a premium SUV, performance vehicle, electric car or well-specified family vehicle, even a modest change to the tax threshold can influence the final drive-away price, deposit requirement and amount financed. That matters in a market where interest rates, insurance costs and running expenses are already stretching household budgets.

The fuel-efficient threshold is especially important for EV and hybrid shoppers. From 1 July 2025, the definition of a fuel-efficient car became much stricter, generally requiring fuel consumption of no more than 3.5 litres per 100 kilometres. That means some conventional hybrids and efficient petrol or diesel models that previously looked tax-favoured may no longer qualify for the higher threshold.

Before signing, buyers should check whether the advertised price includes Luxury Car Tax, on-road costs, dealer delivery and optional accessories. Adding extras can push a vehicle over the relevant threshold, increasing the amount you may need to finance. This is where it helps to model repayments before committing, rather than focusing only on the monthly figure presented at the dealership.

The update also extends recent discussions around EV incentives and novated lease planning. A vehicle sitting just under the fuel-efficient threshold may have a very different after-tax and finance outcome from one that tips above it, particularly for buyers comparing an EV with a petrol or hybrid alternative.

Our take: the new thresholds are a reminder to compare the full cost of ownership, not just the badge or headline discount. If you are buying in the premium end of the market, ask for a full itemised quote, confirm which threshold applies, and compare finance options before you let a dealer finance offer become the default choice.