Luxury tax gets a trim

WASHINGTON - The threshold for the federal luxury tax on cars and light trucks will rise Jan. 1 to $40,000, up from this year's $38,000, an Internal Revenue Service source told the American International Automobile Dealers Association.

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.

Tags: Taxes Luxury

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