Tax break offered on new car purchases
The Internal Revenue Service announced recently 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.
"This deduction may make a decision to buy a new car a little easier for some taxpayers," said Carrie Resch, IRS spokesperson. "It lets buyers purchase now and get money back later on their tax return."
The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
The vehicle must be purchased between February 17 and December 31, 2009 to qualify for the deduction.
The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminds taxpayers the deduction may not be taken on 2008 tax returns.