Special Tax Break Available for New Car Purchases This Year
In an effort to spur the auto sector in our economy, the IRS recently announced that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year.
The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle, giving taxpayers more incentive to purchase a vehicle in 2009.
There are income limits applied to the deduction, and as with some other programs under the stimulus package, the amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
It is also important to note that taxpayers must be purchase the vehicle between Feb. 16, 2009, and Jan. 1, 2010, to qualify for the deduction and that the special deduction is available regardless of whether a taxpayer itemizes deductions on their return, allowing a greater number of individuals to take advantage of this tax break.