Sales Tax Deduction for New Cars and Trucks

Money Back for New Vehicle Purchases. Taxpayers who buy certain new vehicles in 2009 can deduct the state and local sales taxes they paid.

While making the final preparations on my 2008 tax returns, I came across the new 2009 Sales Tax Deduction for Vehicle Purchases on the IRS web site. In a nutshell, The American Recovery and Reinvestment Act of 2009 provides a deduction for state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles through 2009. The deduction is available regardless of whether a taxpayer itemizes deductions on Schedule A. Purchases before Feb. 17, 2009, are not eligible for this special deduction.

The deduction is limited to the tax on up to $49,500 of the purchase price of an eligible motor vehicle. The deduction is phased out for joint filers with modified adjusted gross income between $250,000 and $260,000 and other taxpayers with modified AGI between $125,000 and $135,000. Here is a direct link to the IRS Sales Tax Deduction for Vehicle Purposes Information Page. Please contact the IRS or your tax attorney to verify that this tax deduction applies to you. IRS