Special Tax Break for New Car Purchases in 2009
Taxpayers who buy a new motor vehicle this year may be entitled to deduct state, local, and excise taxes paid on the purchase of their vehicle on their 2009 tax returns next year. For those of you who live in states without sales tax, don't worry, you are also able to take advantage of the deduction.
Taxpayers who purchase a new motor vehicle in states such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon are entitled to deduct other fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee.
The deduction is limited to the state, local, and excise taxes paid on up to $49,500 of the purchase of a qualified new car, light truck, motor home, or motorcycle. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,00 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
However, the IRS states that the vehicle must be purchased after February 16, 2009 and before January 01, 2010, in order to qualify for the deduction. The special deduction is available regardless of whether or not a taxpayer itemizes deduction on his or her return.
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