Issue
Number: IRS Tax Tip 2010-26
Eight Facts about the New Vehicle Sales and Excise
Tax Deduction
If you bought a new
vehicle in 2009, you may be entitled to a special tax deduction for the sales
and excise taxes on your purchase.
Here are eight important
facts the Internal Revenue Service wants you to know about this deduction:
1.
State
and local sales and excise taxes paid on up to $49,500 of the purchase price
of each qualifying vehicle are deductible.
2.
Qualified
motor vehicles generally include new cars, light trucks, motor homes and
motorcycles.
3.
To
qualify for the deduction, the new cars, light trucks and motorcycles must
weigh 8,500 pounds or less. New motor homes are not subject to the weight
limit.
4.
Purchases
must occur after Feb. 16, 2009, and before Jan. 1, 2010.
5.
Purchases
made in states without a sales tax — such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon — may also qualify for the
deduction. Taxpayers in these states may be entitled to deduct other
qualifying fees or taxes imposed by the state or local government. The fees
or taxes that qualify must be assessed on the purchase of the vehicle and
must be based on the vehicle’s sales price or as a per unit fee.
6.
This
deduction can be taken regardless of whether the buyers itemize their
deductions or choose the standard deduction. Taxpayers who do not itemize
will add this additional amount to the standard deduction on their 2009 tax
return.
7.
The
amount of the deduction is phased out for taxpayers whose modified adjusted
gross income is between $125,000 and $135,000 for individual filers and
between $250,000 and $260,000 for joint filers.
8.
Taxpayers
who do not itemize must complete Schedule L, Standard Deduction for Certain
Filers to claim the deduction.
For more information about
these rules and other eligibility requirements visit IRS.gov/recovery.
Links:
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