Possible Sales Tax Deduction For New Vehicle Purchases

The American Recovery and Reinvestment Act permits taxpayers to take a deduction on state and local taxes paid on new vehicle purchases. This applies to vehicles purchased between February 17, 2009 through December 31, 2009. The 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 $ 49,500.00  of the purchase price of an eligible vehicle. There  is an adjustment  for joint filers with modified adjusted gross incomes (MAGI) between $ 250,000 and $260,000,  and other taxpayers with MAGI with incomes between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.

Please consult your tax advisor for more information.

As an alternative you can go to www.irs.gov and click on highlights of recent tax changes, individuals and then deduction of sales and excise taxes paid on purchase of new motor vehicles.

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