Wednesday, December 2, 2009

The American Recovery and Reinvestment Act of 2009: Sales Tax Deduction for Vehicle Purchases

Did you know that if you purchase a new car or light truck before January 1, 2010, you will likely qualify for a special tax deduction on your 2009 State and Local taxes! Contact us today at 919.489.3800 to schedule a test drive. There isn't much time left to take advantage of this offer.

The American Recovery and Reinvestment Act permits taxpayers to take a deduction for state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. The deduction is available on new vehicles purchased from Feb. 17, 2009, through Dec. 31, 2009. In states that don't have a sales tax, the law provides a deduction for other taxes or fees paid. This deduction is available whether or not a taxpayer itemizes deductions on Schedule A.

The deduction is limited to the taxes and fees paid on up to $49,500 of the purchase price of an eligible vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.

For a FAQ on this deduction, please visit the IRS FAQ page.

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