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Don’t choke on gas-guzzler tax

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Do you remember the gas-guzzler tax from years ago? It hasn’t disappeared completely.

Alert: Although most cars won’t be hit with the gas-guzzler tax, it’s still on the books.

When it applies, the tax is reflected in the sales price of a new car.

The gas–guzzler tax was established back in the 1980s when more muscle cars ruled the roads. But now, due to advances in fuel efficiency, few cars—even those with powerful V-8 engines—will trigger the tax. Nevertheless, according to a recent report in USA Today, (“Fewer cars being hit by gas-guzzler tax,” Oct. 28, 2012), the tax still applies to several of GM’s top-end V-8s, plus some luxury cars from Ferrari, Rolls Royce and others.

To avoid this tax, a new car must have a rating of 22.5 mpg or greater. If a vehicle doesn’t measure up based on EPA testing, the owner is charged on a sliding scale, up to a maximum of $7,700 for cars guzzling up to or more than one gallon every 12.5 miles.

Therefore, if you’re in the market for a new car, don’t forget about the gas-guzzler tax.

You might have to factor this into your buying decision.

Tip: Light trucks and SUVs are exempted.

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