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| Taxpayers who buy a new car or several other types of motor vehicles this year may be entitled to a special tax deduction when they file their 2009 federal tax returns next year. The tax break is part of the American Recovery and Reinvestment Act of 2009. |
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Audio: American Recovery and Reinvestment Act Vehicle Tax Deduction
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Consumers who are considering buying a new car may find that this tax incentive means there may have never been a better time to buy.
For more information about the sales and excise tax deduction for motor vehicle purchases visit the official IRS web site at IRS.gov.
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- State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.
- Qualified motor vehicles generally include new (not used) cars, light trucks, motor homes and motorcycles.
- Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
- This deduction can be taken regardless of whether or not you itemize other deductions on your tax return.
- Taxpayers will claim this deduction when filing their 2009 federal income tax return next year.
- 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.
- The deduction may not be taken on 2008 tax returns.
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