diff --git a/packages/utils/src/theme/color-conversion.ts b/packages/utils/src/theme/color-conversion.ts
index 0d0cec1b0..5acd34cdf 100644
--- a/packages/utils/src/theme/color-conversion.ts
+++ b/packages/utils/src/theme/color-conversion.ts
@@ -136,3 +136,35 @@ export function isGrayscale(hex: string): boolean {
     return false;
   }
 }
+
+/**
+ * Calculate relative luminance using WCAG standard
+ * Returns a value between 0 (black) and 1 (white)
+ * Based on: https://www.w3.org/TR/WCAG20/#relativeluminancedef
+ */
+export function getRelativeLuminance(hex: string): number {
+  try {
+    const cleanHex = hex.replace("#", "");
+    const color = chroma(`#${cleanHex}`);
+    return color.luminance();
+  } catch (error) {
+    console.error("Error calculating luminance:", error);
+    return 0.5; // Safe default
+  }
+}
+
+/**
+ * Calculate perceptual brightness using weighted RGB formula
+ * Returns a value between 0 (dark) and 255 (bright)
+ * Uses ITU-R BT.709 coefficients for better perceptual accuracy
+ */
+export function getPerceptualBrightness(hex: string): number {
+  try {
+    const { r, g, b } = hexToRgb(hex);
+    // ITU-R BT.709 coefficients
+    return 0.2126 * r + 0.7152 * g + 0.0722 * b;
+  } catch (error) {
+    console.error("Error calculating brightness:", error);
+    return 128; // Safe default (mid-gray)
+  }
+}
diff --git a/packages/utils/src/theme/index.ts b/packages/utils/src/theme/index.ts
index 61d7ba9d9..a8d54a098 100644
--- a/packages/utils/src/theme/index.ts
+++ b/packages/utils/src/theme/index.ts
@@ -13,7 +13,13 @@ export {
 } from "./palette-generator";
 
 // Theme application
-export { applyCustomTheme, clearCustomTheme } from "./theme-application";
+export {
+  applyCustomTheme,
+  clearCustomTheme,
+  isColorDark,
+  getOnColorTextColors,
+  type DarknessDetectionMethod,
+} from "./theme-application";
 
 // Color conversion utilities
 export {
@@ -24,6 +30,8 @@ export {
   isGrayscale,
   oklchToCSS,
   parseOKLCH,
+  getRelativeLuminance,
+  getPerceptualBrightness,
   // rgbToHex,
   type OKLCH,
   type RGB,
diff --git a/packages/utils/src/theme/theme-application.ts b/packages/utils/src/theme/theme-application.ts
index b54d33c59..66041007a 100644
--- a/packages/utils/src/theme/theme-application.ts
+++ b/packages/utils/src/theme/theme-application.ts
@@ -3,11 +3,79 @@
  * Applies generated palettes to CSS variables for Plane's theme system
  */
 
-import { hexToOKLCH, oklchToCSS } from "./color-conversion";
+import { hexToOKLCH, oklchToCSS, getRelativeLuminance, getPerceptualBrightness } from "./color-conversion";
+import type { OKLCH } from "./color-conversion";
 import { ALPHA_MAPPING } from "./constants";
 import { generateThemePalettes } from "./palette-generator";
 import { getBrandMapping, getNeutralMapping, invertPalette } from "./theme-inversion";
 
+/**
+ * Color darkness detection methods
+ */
+export type DarknessDetectionMethod = "wcag" | "oklch" | "perceptual";
+
+/**
+ * Determine if a color is dark using various methods
+ *
+ * Methods:
+ * - 'wcag': Uses WCAG relative luminance (0-1 scale, threshold 0.5) - Most accurate for accessibility
+ * - 'oklch': Uses OKLCH lightness (0-1 scale, threshold 0.5) - Good for perceptual uniformity
+ * - 'perceptual': Uses weighted RGB brightness (0-255 scale, threshold 128) - Simple and fast
+ *
+ * @param brandColor - Brand color in hex format
+ * @param method - Detection method to use (default: 'wcag')
+ * @returns true if the color is dark, false if light
+ */
+export function isColorDark(brandColor: string, method: DarknessDetectionMethod = "wcag"): boolean {
+  switch (method) {
+    case "wcag": {
+      // WCAG relative luminance: 0 (black) to 1 (white)
+      // Threshold of 0.5 means colors darker than 50% gray are considered dark
+      const luminance = getRelativeLuminance(brandColor);
+      return luminance < 0.5;
+    }
+    case "oklch": {
+      // OKLCH lightness: 0 (black) to 1 (white)
+      // Threshold of 0.5 provides good balance for most colors
+      const oklch = hexToOKLCH(brandColor);
+      return oklch.l < 0.5;
+    }
+    case "perceptual": {
+      // Perceptual brightness: 0 (black) to 255 (white)
+      // Threshold of 128 is the midpoint
+      const brightness = getPerceptualBrightness(brandColor);
+      return brightness < 128;
+    }
+    default:
+      return getRelativeLuminance(brandColor) < 0.5;
+  }
+}
+
+/**
+ * Get contrasting text colors for use on a colored background
+ * Returns white text for dark backgrounds, black text for light backgrounds
+ *
+ * @param brandColor - Brand color in hex format
+ * @param method - Detection method to use (default: 'wcag')
+ * @returns Object with text and icon colors in OKLCH format
+ */
+export function getOnColorTextColors(
+  brandColor: string,
+  method: DarknessDetectionMethod = "wcag"
+): {
+  textColor: OKLCH;
+  iconColor: OKLCH;
+} {
+  const isDark = isColorDark(brandColor, method);
+  const white: OKLCH = { l: 1, c: 0, h: 0 };
+  const black: OKLCH = { l: 0, c: 0, h: 0 };
+
+  return {
+    textColor: isDark ? white : black,
+    iconColor: isDark ? black : white,
+  };
+}
+
 /**
  * Apply custom theme using 2-color palette system
  * Generates full palettes from brand and neutral colors
@@ -32,7 +100,6 @@ export function applyCustomTheme(brandColor: string, neutralColor: string, mode:
   // Generate palettes directly in OKLCH color space
   const { brandPalette, neutralPalette } = generateThemePalettes(brandColor, neutralColor, mode);
   const neutralOKLCH = hexToOKLCH(neutralColor);
-  const brandOKLCH = hexToOKLCH(brandColor);
 
   // For dark mode, invert the palettes
   const activeBrandPalette = mode === "dark" ? invertPalette(brandPalette) : brandPalette;
@@ -57,14 +124,11 @@ export function applyCustomTheme(brandColor: string, neutralColor: string, mode:
     themeElement.style.setProperty(`--color-alpha-black-${key}`, oklchToCSS(neutralOKLCH, value * 100));
   });
 
-  const isBrandColorDark = brandOKLCH.l < 0.2;
-  const whiteInOKLCH = { l: 1, c: 0, h: 0 };
-  const blackInOKLCH = { l: 0, c: 0, h: 0 };
-  themeElement.style.setProperty(`--text-color-on-color`, oklchToCSS(isBrandColorDark ? whiteInOKLCH : blackInOKLCH));
-  themeElement.style.setProperty(
-    `--text-color-icon-on-color`,
-    oklchToCSS(isBrandColorDark ? blackInOKLCH : whiteInOKLCH)
-  );
+  // Apply contrasting text colors for use on colored backgrounds
+  // Uses WCAG relative luminance for accurate contrast determination
+  const { textColor, iconColor } = getOnColorTextColors(brandColor, "wcag");
+  themeElement.style.setProperty(`--text-color-on-color`, oklchToCSS(textColor));
+  themeElement.style.setProperty(`--text-color-icon-on-color`, oklchToCSS(iconColor));
 }
 
 /**