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Federal Sales Tax Incentive To Buy New Vehicles Expires December 31, 2009

Dec 17, 2009

IRS Reminds Dealers (And Consumers) About State And Local Sales And Excise Tax Deduction

Recently, Cash for Clunkers has garnered all of the headlines, but there is another important incentive that dealers can highlight when a car buyer enters their showroom. The American Recovery and Reinvestment Act, which passed earlier this year, includes a deduction for state and local sales and excise taxes when consumers purchase a new car, light truck, motor home or motorcycle through December 31, 2009. The deduction is limited to the first $49,500 of the vehicle’s purchase price and the amount of the deduction starts phasing out if a consumer makes more than $125,000 individually, or $250,000, if they file a joint return. The Internal Revenue Service has produced a letter-sized handout that dealers are encouraged to distribute to potential car buyers reminding them of this added incentive. The flyer is available electronically at in English, Spanish, Russian, Chinese, Korean and Vietnamese.