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Sales Tax Deduction for Vehicle Purchases


Under The American Recovery and Reinvestment Act taxpayers can deduct state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. The deduction is limited to new (as apposed to used) vehicles purchased from Feb. 17, 2009, through Dec. 31, 2009 and only for the sales tax on the first $49,500 of the purchased price , to use it in your tax return, please click here.
 
 
The deduction is phased out for taxpayers filing a joint return with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and completely disallowed if the MAGI is over $260,000. The deduction is also phased out for other taxpayers with MAGI between $125,000 and $135,000 and completely disallowed if the MAGI is over $135,000.Where do I report Sales Tax Deduction for Vehicle Purchases? This deduction is not part of the itemized deductions and can be claimed by a taxpayers who claim standard or itemized deductions on IRS form 1040, Schedule A, Line 7.
 
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