Thursday, February 19, 2009

New Auto Tax Deductions Just Signed Into Law

President Barack Obama signed into law the American Recovery and Reinvestment Act of 2009. The new law contains a provision designed to entice auto consumers back into vehicle showrooms. This provision applies to eligible purchases between February 17, 2009 and December 31, 2009. Qualifying consumers may now deduct:

· State motor vehicle sales taxes
· Local motor vehicle sales taxes
· Motor vehicle excise taxes

Consumer Qualifications:
· Individual taxpayers whose adjusted gross income is less than $125,000 per year
· Joint-filers whose combined adjusted gross income is less than $250,000 per year
· Itemizers and non-itemizers who may deduct taxes "above-the-line" on their federal tax returns

Eligible Vehicles:
· All new model year vehicles currently on dealers' lots that have no prior purchase history
· New passenger cars and light trucks retailing up to $49,500 may collect full tax deductions. For all vehicles above this price, consumers may deduct sales taxes on the first $49,500
· The vehicle must weigh less than 8,500 pounds total