Some Relief for Taxing Issue of Luxury-Car Affordability

Here’s cheery news for those with a wad to spend and a desire to spend it on a new car or truck.

The federal luxury tax on new vehicles for transaction prices in excess of $40,000 falls to 3% as it enters its final year Jan. 1. It was 4% this year. The tax applies to that portion of the selling price that exceeds $40,000.

So if your predilections point you to a Porsche--say, a $119,195 Porsche 911 Tiptronic Turbo with all-wheel drive--the luxury tariff in 2002 would be 3% of $79,195, or $2,375.85.

Tax on a $45,000 vehicle would be $150.

Of course, if you can wait a year, the automotive luxury tax expires at the end of 2002.