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



ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.