SALES TAX DEDUCTION FOR NEW VEHICLE

 The American Recovery and Reinvestment Act permits taxpayers to take a deduction for state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. The deduction is available on qualified new vehicles purchased from February 17, 2009, through December 31, 2009. A qualified motor vehicle is a passenger automobile, light truck or motorcycle, which has a gross vehicle weight rating of 8,500 pounds or less.

 The deduction is limited to the sales and excise taxes and similar fees paid on up to $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.

 The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.

Information provided by: Internal Revenue Service