Luxury Car Tax Changes 2025
More Mid-Range Hybrids and SUVs Now Attract Luxury Car Tax. Find Out How the Tax Changes Impacted Their Cost and Why.
From 1 July 2025, changes to fuel-efficiency rules saw many new cars fall into the Luxury Car Tax net. It’s not just luxury imported brands, family SUVs, hybrids, and even some plug-in hybrids are affected and now cost more.
What Changed in July 2025?
Until mid-2025, cars rated under 7.0 L/100 km were considered “fuel-efficient” and qualified for a higher LCT threshold of $91,387 (instead of the standard $80,567).
From 1 July 2025, that definition was slashed in half. Now only vehicles using 3.5 L/100 km or less qualify for the higher threshold.
That means many hybrids and mid-range SUVs that were once treated as “efficient” are now taxed like standard vehicles, pushing up their cost.
SUVs and Hybrids Now Hit by LCT
Here are some popular models that no longer meet the new 3.5 L/100 km fuel-efficiency rule:
Popular Models Now Affected
Toyota Kluger Hybrid (5.6 L/100 km)
Mazda CX-90 Hybrid (5.4 L/100 km)
Mazda CX-60 Hybrid (4.9 L/100 km)
Kia Sorento Hybrid (5.4 L/100 km)
Hyundai Santa Fe Hybrid (5.6 L/100 km)
These vehicles previously benefited from the higher threshold but now fall back to the lower standard threshold, increasing their tax liability.
Models that Still Qualify (≤ 3.5 L/100 km)
Volvo XC90 PHEV (1.8 L/100 km)
Land Rover Defender PHEV (3.4 L/100 km)
The Cost Impact: Before vs After July 2025
Example – $100,000 Hybrid SUV
Before July 2025 (fuel-efficient threshold $91,387)
- Price above threshold: $8,613
- LCT payable: $2,585
After July 2025 (standard threshold $80,567)
- Price above threshold: $19,433
- LCT payable: $5,830
Result = extra $3,245 in tax.
What Buyers Need to Do
- Check the thresholds – Don’t assume your “efficient” hybrid avoids LCT. Ask the dealer upfront.
- Budget carefully – Remember that LCT is included in the drive-away price, along with stamp duty and GST.
- Compare alternatives – In some cases, moving to a full EV or ultra-low consumption hybrid could save you thousands.
- Think long term – The government has signalled possible future reforms or a phase-out of LCT, but for now, it’s here to stay.
Cashflow Financial – Helping you plan smarter for life’s hidden costs.
Extra cost = $3,245
Result: That’s an extra $3,245 in tax—for the exact same car.
hat Buyers Need to Do
- Check the thresholds – Don’t assume your “efficient” hybrid avoids LCT. Ask the dealer upfront.
- Budget carefully – Remember that LCT is included in the drive-away price, along with stamp duty and GST.
- Compare alternatives – In some cases, moving to a full EV or ultra-low consumption hybrid could save you thousands.
- Think long term – The government has signalled possible future reforms or a phase-out of LCT, but for now, it’s here to stay.
Cashflow Financial – Helping you plan smarter for life’s hidden costs.