TAX NEWS - October 2009
IRS Tax: IRS Reminds Taxpayers have New Car Sales and Excise Tax Deduction Until the End of 2009
The American Recovery and Reinvestment Act of 2009 brings a special tax deduction for state and local sales tax and excise tax paid when buying certain vehicles. Vehicles covered are passenger car, motor homes, light trucks and motorcycles with a gross weight not more than 8,500 pounds.
To qualify for the tax deduction, the vehicles must be purchased after 16 February 2022 and before 01 January 2010. According to IRS, local and state sales tax paid up to $49,500 of the buying price is deductible. So, if you're about to buy a really expensive automobile, remember that the whole amount of local and state sales taxes paid for the car may not always be fully deductible.
There's normally a mix of model years waiting in the showrooms, this can be a 2009, 2010, or even a 2008 model year vehicle. As long as you're the first owner of the car, you're eligible for this special tax return, IRS reminds.
There are some qualifications for having this special tax deduction, however. The New Car Sales and Excise Tax Deduction is not available for taxpayers those who have a high income. Only taxpayers with an income not more than $125,000 will be eligible for the tax deduction, the gross income must be less than $250,000 for married couples, the IRS reminds.
Read more about IRS Tax.