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Author: Charlie48K Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 122998  
Subject: Re: Federal Auto Luxury Tax Date: 8/5/2001 10:00 PM
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<i.I am considering the purchase of a car this year and am aware of the 4% tax on vehicles costing more than $38,000. Does anyone how the tax is calculated as follows:

(i) tax on only the cost basis above $38,000 or for the entire purchase price?

It's the regular tax on the price up to the limit and then luxury tax above. I'll trust you that $38,000 is the limit mow.

(ii) how is the purchase price defined? That is, is the tax applied to everything (vehicle cost + destination charge + advertising charge + registration fees + other fees + state sales tax).

It includes the first three. It includes everything the dealer charges, since registration and sales taxes are charged by the government, they don't count.
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