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Old 07-03-2009, 09:50 AM
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The ARR Act of 2009 offers a Sales Tax Deduction for purhase of new vehicle in 2009.

The IRS has announced that "the American Recovery and Reinvestment Act of 2009 provides a deduction for state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles through 2009. It also provides for the deduction of other taxes or fees paid in states with no sales tax. The deduction is available regardless of whether a taxpayer itemizes deductions on Schedule A."

However, the IRS has stated that "purchases before Feb. 17, 2009, are not eligible for this special deduction."

Furthermore, other restrictions are that the deduction is limited to the tax on up to $49,500 of the purchase price of an eligible motor vehicle. The deduction is phased out for joint filers with modified adjusted gross income between $250,000 and $260,000 and other taxpayers with modified AGI between $125,000 and $135,000.

The IRS has stated that Taxpayers who make qualifying new vehicle purchase this year can estimate their deduction with the help of IRS Publication 919, "How Do I Adjust My Withholding."

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