Tax Information

Buy a car, get a break. Thinking about a new car? 2009 is the year to buy. You may be entitled to deduct state and local sales and excise taxes paid on the purchase on your 2009 tax return. In fact, the Internal Revenue Service and Treasury Department have determined that purchases made in states without a sales tax – Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon – can also qualify for the deduction if certain other fees or taxes are imposed by the state or local government in conjunction with the vehicle purchase.

IRS Commissioner Doug Shulman said, "This deduction enables taxpayers to buy now and get cash back later on their tax returns." You must purchase after February 16, 2009, and before January 1, 2010, to qualify for the deduction. Get more information by visiting http://www.irs.gov/newsroom/article/0,,id=209624,00.html

Ready for more good news? The special deduction is available regardless of whether you itemize deductions. Under current law, purchasers can claim this special deduction only on their 2009 tax returns -- not on 2008 or earlier tax returns, and not on returns after the 2009 return... So what are you waiting for? Here’s the fine print: 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, 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. Learn more.

If you have any questions about this deduction or how it might apply to your purchase of a new vehicle, please consult your tax advisor or www.irs.gov.