For shoppers still in the market for a fancy car, the holidays just got a little brighter -- the federal luxury tax on automobiles went out with the old year.

The tax, enacted in 1990 as part of a package of taxes on "envy items," including boats, furs, jewelry and airplanes, has long been a thorn in the side of high-end car dealers. The levy originally amounted to 10 percent of the amount by which a car's price exceeded $30,000. Congress backtracked in 1993 and repealed the tax on the other luxury items after being blamed for the collapse of the pleasure-boat industry. But cars continued to be taxed.

The tax raised $400 million to $450 million most years, hitting a high of about $530 million in 1996, said David Regan, executive director of legislative affairs at the National Automobile Dealers Association.

Some dealers were outwardly unconcerned about the tax, arguing that for wealthy clientele the $1,800 that the tax would have added last year to the price of a $100,000 car was little more than a minor annoyance. But others conceded that they often had to eat some or all of the tax to close deals.

That was one reason "we had problems with the tax," said Regen. "The burden of the tax was really falling on small-business dealers as well as the consumer. It wasn't good tax policy."

The industry persuaded Congress in 1996 to end the tax. Because of concerns about lost revenue, it was phased out, with the tax lowered as the threshold for its application was raised to $40,000. Revenue fell as the phaseout progressed, and it would have raised about $200 million this year had it remained in effect, Regan said.

Last year the tax applied to about 700,000 vehicle sales, according to the dealers association.

Regan and other auto industry experts said the end of the tax couldn't have come at a better time for the industry and the economy, which continues to sputter.

"This year's 3 percent would add $1,200 to the cost of many high-end luxury cars" and sport-utility vehicles, said Paul Taylor, chief economist of the dealers association. "That amount coming off the transaction price in 2003 provides an impact of nearly the same magnitude as a $1,200 cash rebate. Just as cash rebates and other incentives helped luxury-car sales in 2002, the repeal of the luxury tax should help boost sales in 2003."

In addition, some buyers of the largest SUVs -- those over 6,000 pounds -- now have another tax benefit as well. Last year's Job Creation and Worker Assistance Act allows a bonus depreciation write-off for light trucks, which SUVs technically are, when they are used in business. In some cases, this would allow the buyer to deduct more than half of the vehicle's cost in the first year.