The increase, based on IRS analysis of inflation, is to be formally announced Monday, Dec. 24.
The luxury tax rate will decrease Jan. 1 to 3 percent, from this year's 4 percent. The tax is to expire Jan. 1, 2003. For example, the 2002 tax on a $44,000 vehicle would be $120. That is 3 percent of the amount more than $40,000.