The Luxury Car Tax may soon be axed: What does this mean for premium 4x4s?

Premium 4x4s could potentially get considerably cheaper, if the newly re-elected Labor government does indeed scrap the Luxury Car Tax (LCT) which was implemented way back in 2000.

The LCT adds a hefty 33-per-cent tax on the portion of any vehicle priced over $80,567 – or $91,387 for more fuel-efficient models. That means consumers have been forced to pay thousands more for high-end 4WDs – but the tax, initially introduced to protect the now-defunct local car industry, may soon be axed by the Albanese-led government.

And while the legislation hasn’t officially been passed yet, it’s widely expected that the LCT could be gone by the end of 2025, in part to smooth over trade negotiations with the European Union. The EU has long viewed the tax as a barrier to fair trade, especially for high-end European cars, and it looks like Australia’s ready to make a change.

This could mean a major price drop for popular models. For example, the Toyota LandCruiser 300 Series Sahara ZX, currently priced at around $144,000, would lose about $15,600 in LCT – knocking the price down to around $128,400 before dealer and on-road costs. $15K of aftermarket equipment could go a long way! 

You can do the maths, but the Patrol’s price could drop by at least $7000, RAM’s 1500 Laramie could lose roughly $13,000, and the Ford F-150 Lariat and Land Rover Defender 110 D300 could see significant price reductions from anywhere from $10,000 to $15,000.

However, there’s a catch, and it’s a big one: New Vehicle Efficiency Standard (NVES) emissions rules are just around the corner and could drive those savings right back up.

To be implemented from July 1, 2025, the NVES aims to slash emissions across the automotive industry by fining manufacturers whose vehicles fail to meet the new carbon dioxide limits – vehicles just like the ones mentioned above. And while the penalties will hit manufacturers first, the reality is they’re almost certain to pass the costs on to buyers. 

It’s also worth remembering that in states like Victoria and Queensland, there are still state-based luxury car taxes in play, which can add up to five per cent on vehicles priced over $100,000. 

So while the idea of saving significant money is exciting, it’s worth tempering expectations. The removal of the LCT isn’t a magic fix – and it won’t suddenly make every high-end off-roader cheap. With emissions rules set to reshape the market and state taxes still hanging around, what you save on one end could be lost on the other.