Sales Tax Deduction for New Car Purchases

A reader name Patrick just wrote in to point out a recent IRS press release about a special tax break for new car purchases in 2009. From the release: The Internal Revenue Service announced today that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year. While youve been able to deduct sales taxes for quite some time now, this deduction was previously limited to those that itemize their deductions, and you also had to make a choice between deducting your state income tax and your sales tax. Details of the New Car Sales Tax Deduction The deduction is limited to state local sales and excise taxes on up to $49,500 of the purchase price of a qualified new car, light truck, motor home, or motorcycle. In order to qualify, the vehicle must have been purchased between February 16, 2009 and January 1, 2010. The deduction phases out for individual filers with modified adjusted gross income of $125k-$135k and joint filers in the $250k-$260k range. As noted above, you can claim this deduction even if you dont itemize your deductions. Follow me on Twitter! ---Related Articles at fivecentnickel.com:» Dont Miss These Tax Breaks, Part 1» Optional Sales Tax Tables are Still Available» Dont Miss These Tax Deductions» Home Sales UP in February» Mall Jewelry Store Sales» How to Decide if Travelling to a Sales Tax Holiday is Worthwhile» Gas Prices Drop, American Car Buyers Forego Economy» The Home Office Tax Deduction