New Car Sales-Tax Deduction
Potential car buyers have till the end of the year to grab this above-the-line deduction.
By Mary Beth Franklin, Senior Editor
From Kiplinger's Personal Finance magazine, May 2009
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The stimulus lets you write off state and local sales taxes and excise taxes on vehicles, including new cars, light trucks, motor homes and motorcycles bought from February 17 through the end of 2009. You can claim the deduction on your 2009 tax return (which you file next year), regardless of whether you itemize your deductions or claim the standard deduction, which is what most taxpayers choose to do.
If you itemize deductions and normally deduct your state income taxes, you can also claim the new sales-tax deduction for a new car. But if you itemize and choose the option of deducting your state sales taxes (perhaps because you live in a state that doesn't have an income tax), you cannot claim the new above-the-line sales-tax break.
See More From the Stimulus Guide
The New Stimulus Tax Credit
This tax break puts up to $400 in your pocket.
Better Benefits for the Unemployed
Qualified filers get an extra $25 a week.
New Homebuyer Credit
Take up to 10% off your purchase price.
Health-Care Subsidy for the Unemployed
Now there's extra help for paying COBRA coverage.
AMT Tax Relief
Taxpayers get a one-year fix on the alternative minimum tax.
College Aid Gets Fresh Funding
Rather than introduce big new ideas, this bill mostly replenishes underfunded programs and increases amounts available to families.
Reader Comments (3)
Posted by: Philip J. Palese at 05/02/2009 08:59:12 PM
This article states that if I live in state with no state income tax--and therefore deduct my state sales taxes--I CANNOT CLAIM THIS TAX BREAK!!!!Did I read this correctly???
Posted by: FL state at 06/07/2009 12:19:25 AM
FL is such a state. Is it qualified or not for this deduction?
Posted by: Frank in MD at 10/07/2009 01:42:37 PM
To Mr. Palese: Yes, I think you read that correctly. My understanding is that if you live in a state without a state income tax and elect to deduct your total state sales tax instead, you are already including the new car's state sales tax in the total sales tax deducted amount. If you were to again add this special deduction, you would end up deducting this amount twice. Hope this helps!