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Tax break for new cars buyers in the American Recovery and Reinvestment Act of 2009 (MS Word)
Tax break for new cars buyers in the American Recovery and Reinvestment Act of 2009 (.pdf)
Tax break for new car buyers in the American Recovery and
Reinvestment Act of 2009
Dear Reader,
In hopes of spurring the overall economy in general, and the
automobile industry in particular, the recently enacted “American
Recovery and Reinvestment Act of 2009” includes a new tax break for
purchasers of new cars: a deduction for state and local sales and
excise taxes paid on new vehicle purchases. Here are the details.
Sales tax is generally not a deductible item for individuals. A
limited exception allows taxpayers who itemize their deductions to
claim either state and local income taxes or state and local general
sales taxes, which mainly benefits taxpayers with a state or local
sales tax but no income tax. Under the new law, buyers can claim an
income tax deduction for the sales or excise tax they pay on a
vehicle purchase. Key details of this new tax incentive include:
-
The tax break
applies to purchases of passenger cars, minivans, light trucks,
motorcycles, and motor homes, but it only applies on $49,500 of
the vehicle's price and it only applies to new vehicles.
-
The tax break
covers new vehicles purchased between Feb. 17, 2009 and the end
of 2009.
-
You do not
have to itemize your deductions to be able to claim the
deduction. However, the deduction cannot be taken by a taxpayer
who elects to deduct state and local sales taxes in lieu of
state and local income taxes.
-
Only couples
making less than $250,000 a year, or individuals making less
than $125,000 annually, qualify for the full deduction.
I hope this information is helpful. If you would like more details
about this or any other aspect of the new law, please do not
hesitate to call.