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Nine Facts about the New Vehicle
Sales and Excise Tax Deduction
Taxpayers who buy new motor vehicles this year may be
entitled to a special tax deduction for the sales or excise taxes on those
purchases when they file their 2009 federal tax returns next year. This tax
break is part of the American Recovery and Reinvestment Act of 2009.
Taxpayers in states that do not have state sales taxes may be entitled to
deduct other fees or taxes imposed by the state or local government.
Here are nine important facts the IRS wants you to know about the
deduction.
- State and local sales and excise taxes paid on up to $49,500 of the
purchase price of each qualifying vehicle are deductible.
- Qualified motor vehicles generally include new cars, light trucks,
motor homes and motorcycles.
- To qualify for the deduction, the new cars, light trucks and
motorcycles must weigh 8,500 pounds or less. Motor homes are not subject
to the weight limit.
- Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
- Taxpayers who purchase new motor vehicles in states that do not have
state sales taxes may be entitled to deduct other fees or taxes assessed
on the purchase of those vehicles. Fees or taxes that qualify must be
based on the vehicles’ sales price or as a per unit fee. These states
include Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.
- Taxpayers who purchase qualified motor vehicles may claim the
deduction when they file their 2009 tax return in 2010.
- The deduction may not be taken on 2008 tax returns.
- This deduction can be taken regardless of whether the buyers itemize
their deductions or choose the standard deduction.Taxpayers who do not
itemize will add this additional amount to the standard deduction on their
2009 tax return.
- 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.
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