Stimulus Package Allows Tax Deduction on New Cars Bought through 2009
Last week we reported that the Senate had hoped to make both the sales tax and the interest on auto loans deductible in the giant economic stimulus package signed yesterday by President Obama. During House/Senate negotiations, the interest deduction was struck down in order to decrease the overall size of the package. But H.R.1, the American Recovery and Reinvestment Act of 2009, still allows sales tax deductions on new vehicle purchases.
What are the specifics for auto shoppers? In sum, state and local motor vehicle sales taxes and motor vehicle excise taxes are all deductible on any new car, light truck, recreational vehicle, or motorcycles purchased between February 17th and December 31, 2009. Individuals with a modified adjusted gross income of less than $125,000 or joint-filers making less than $250,000 a year in 2009 qualify.
According to the National Automobile Dealers Association, it doesn't matter what model year your vehicle is (2008 or 2009, for example). New vehicles of any model year qualify so long as you're the vehicle's first owner.
Any vehicle sold for under $49,500 qualifies for the full deduction, but consumers may also deduct sales taxes on the first $49,500 of any vehicle sold above this price. It is considered an "above the line" (for itemizers and non-itemizers) deduction on federal tax return.
Of course, the actual amount of your deduction depends on your tax bracket, so consult with a tax professional for more details.
There will also be significant tax credits for plug-in hybrids purchased beginning December 31, 2009 that will extend to the first 200,000 models sold by each automaker. For more details on the stimulus package and green vehicles, see the Green Car Advisor blog entry here.
- Posted by
- Joanne Helperin February 18, 2009, 12:06 PM
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- Car Buying
- Technorati Tags:
- New cars, Stimulus package, Tax Credits, tax deduction
I already get to do this so this doesn't make a difference for me. The only people that this makes a difference for are people who pay state income tax. If you are fortunate to live in a state without income tax, you get to deduct all sales taxes along with car registration yearly taxes of your income...
This still allows a benefit to those who live in a state without income tax, because it is an above the line deduction. so even filers who do not itemize their deductions on the 1040 Long form, can take this deduction.
It does not seem to benefit those of us with NO taxable income...ie, social security and other small incomes. It is a shame, it would help tremendously........