Deduction for Sale Tax on New Car Purchase

The 2009 Act allows an income tax deduction for state and local sales and excise taxes paid on the purchase of a new qualifed vehicle on or after the 2009 Act's enactment date and before 2010. This deduction is allowed even if you do not itemize. Put it on page one of the 1040 tax return and it reduces your adjusted gross income. For purposes of the deduction a "qualified motor vehicle" is generally defined as a new passenger automobile, light truck, motorcycle, or certain motor homes. The deduction is available only for taxes paid on up to $49,500 of the cost of a qualified vehicle.

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