The "Cash for Clunkers" program for new cars has ended, but theIRS wants to remindtaxpayersthat many peoplemight overlookanother specialbreak available. If you buy a new vehicle this year,there'sa special federal tax deductionavailable that can help you save money - in some cases hundreds of dollars.
This tax break will allow people who buy a new vehicle in 2009 to deduct the sales and excise taxes they pay when they file their tax return next year. The tax deduction is available on the 2009 federal tax return even for those who claim the standard deduction.
The deduction is part of the American Recovery and Reinvestment Act of 2009 and applies to taxes paid on up to $49,500 of the purchase price for qualified new cars, light trucks, motorcycles or motor homes. Generally, vehicles weighing 8,500 pounds or less qualify. This means most new cars and many new trucks will qualify. New motor homes qualify regardless of weight.
Buyers are entitled to a partial deduction if they earn between $125,000 and $135,000 ($250,000 and $260,000 for joint filers). The deduction is eliminated for those who earn over these amounts.
To qualify the vehicle must be new and purchased after Feb. 16 in 2009 and no later than Dec. 31. There is still time left but the clock is ticking.
More information is available at www.irs.gov/recovery
Fact Box
The deduction is part of the American Recovery and Reinvestment Act of 2009 and applies to taxes paid on up to $49,500 of the purchase price for qualified new cars, light trucks, motorcycles or motor homes.
Terry L. Lemons
Director of Communications
Internal Revenue Service
