Tax Break for New Wheels

If you bought a new car or truck last year, you can claim a special deduction.

What’s better than that new-car smell? The smell of money! And you’ll get to enjoy both if you bought a new vehicle last year, whether it was a car, a motorcycle, a light truck or a motor home. Remember, you must buy a new car to get a tax break -- you can’t purchase a used car or lease a vehicle. And timing matters.

As long as you bought the new vehicle after February 16, 2009, through the end of the year, you may be able to deduct the state or local sales tax or excise tax. The deduction is limited to the tax you paid on up to $49,500 of the purchase price, but there is no limit on the number of eligible vehicles.

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Mary Beth Franklin
Former Senior Editor, Kiplinger's Personal Finance