New Tax Deductions for New Vehicles

President Obama signed “The American Recovery and Reinvestment Act of 2009” into law on February 17, 2009. The law includes a new consumer tax deduction for State and local sales and excise taxes paid to purchase a motor vehicle during 2009.

• Provides consumers a new tax deduction on their 2009 Federal income
  taxes for “qualified motor vehicle taxes.”


• Qualified motor vehicle taxes include any State or local sales
  or excise tax imposed on the purchase of a qualified motor vehicle.


• Qualified motor vehicles include passenger automobiles or light trucks
  with a weight rating of not more than 8,500 pounds.


• Applies to NEW vehicles only.


• Deduction allowed for non-itemizers.


• Limitation on Vehicle Price: limited to the tax on up to $49,500 of the
  purchase price of a qualified motor vehicle.


• Income Limitation: Phased out for taxpayers with modified adjusted gross
  income between $125,000 and $135,000 ($250,000 and $260,000 in the case of a
  joint return).


• Effective Date: Purchases on or after February 17, 2009, and
  before January 1, 2010.

Customers with questions related to their particular tax situation should be advised to consult with a financial adviser.