New Vehicle Tax Deduction

What the legislation does:

Entitles taxpayers, who purchase a new vehicle this year, the ability to deduct state and local sales and excise taxes paid on the purchase.

What Taxes are Deductible?
State Motor Vehicle Sales
Local Motor Vehicle Sales
Motor Vehicle Excise Taxes

What Customers Qualify for the Deduction?
Individual customers with a modified adjusted gross income of less than $125,000 or joint-filers making less than $250,000 a year in 2009 would qualify for the deduction.
Deduction is "above-the-line" meaning it can be taken advantage of by itemizers and non-itemizers.

Effective Date:
Vehicles must be purchased on February 17,2009 through December 21,2009.

Vehicle Qualifications:
Any new vehicle not more than 8,500 pounds gross vehicle weight.
New vehicle of any model year.
Tax break only applies on $49,500 of the vehicle price.

Example:
     MSRP                                                     $30,465
     EP Discount                                            $ 3,013
     Customer Cash Allowance                        $ 1,500
Customer Price                                           $25,952

     Sales Tax Deduction @ 6.%                     $1,557
     Excise Tax                                              $    50
     City Motor Vehicle Tax                             $    45
Federal Tax Deductible Amount                $1,652

Potential Federal Tax Savings*                 $463
Assumes 28% tax rate

NOTE: Actual tax savings may vary and are dependant on an individual's tax situation/rate.

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