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Video: The New 2009 Tax Deduction for Car Buyers

Updated for Tax Year 2009


If you bought a new car, motorcycle, RV or SUV this year, a new tax break could help you pay for your next tune-up.

Note: The content of this article applies only to taxes prepared for 2009. It is included here for reference only.

Hi, I'm Michael Alban from TurboTax. If you bought a new car, motorcycle, RV or SUV this year, a new tax break could help you pay for your next tune-up.

If you purchased your new vehicle between February 17 and December 31, 2009, you could lower your 2009 federal tax bill by deducting state sales tax under the Auto Assistance Ownership Amendment.

Claim the deduction for any or all the vehicles you purchased. Each one is eligible, up to a $49,500 sticker price and 8,500 pounds. Married couples who earn up to $260,000 combined, and individuals who earn up to $135,000, can claim the credit, even if you don't itemize your deductions.

So what's your bottom line? That depends on the car price, the sales tax and your personal income tax rate. Say the new car cost $30,000, a little above the national new car average. If you live in West Virginia, you would have paid 6% sales tax or $1,800. Come April, you can deduct that $1,800 from your taxable income.

Middle-class taxpayers can expect to save somewhere between $250 and $375. Sure, that's a drop in the bucket compared to sticker prices these days, but with gas at an average price of $2.50 a gallon, a $300 tax break should keep you on the road for a few thousand extra miles.

For more information, visit TurboTax.com.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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