Manufacturers have been offering cash-back incentives on new car purchases for years. Now you can add an Internal Revenue Service benefit to that package.
The IRS announced that state, local and excise taxes on new car purchases made this year can be deducted on the buyer’s 2009 tax returns next year.
“For those thinking about buying a new car, this deduction may give them a little more drive to make their purchase this year,” said IRS commissioner Doug Shulman.
The deduction applies to state and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle bought from Feb. 16 to Dec. 31, 2009.
Of course, there’s a catch. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 to $135,000 for individual filers and $250,000 to $260,000 for joint filers.
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