Note: This tax credit was valid only for 2009 taxes
The credit described in this article was part of the 2009 American Reinvestment and Recovery Act (ARRA) and was only available for your 2009 tax return. The information below is provided for reference, but does not apply to your 2010 or later returns.
You can deduct the sales tax you pay on a new vehicle, if you buy it between February 17 and December 31, 2009. And you get this tax break even if you claim the standard deduction—as most taxpayers do—rather than itemizing deductions on your tax return.
For people who take the standard deduction on their 2009 returns next spring, the sales tax deduction will be added to their standard deduction. For example, the standard deduction for married couples for 2009 is $11,400. If a couple pays 6 percent sales tax on a $30,000 car, they can add the $1,800 sales tax to the $11,400 and claim a standard deduction of $13,200. That $1,800 deduction could be worth as much as $450 in tax savings for a car buyer who’s in the 25 percent tax bracket.
Taxpayers who itemize deductions will include their vehicle sales taxes with other qualifying expenses, such as state and local income and property taxes, mortgage interest, charitable contributions and medical expenses.