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The deduction is limited to state, local and excise taxes paid on the first $49, 000 of an eligible vehicle. Also, a deduction reduced for joint filers with modified adjusted gross incomes (MAGI) between $250, 000 and $260, 000 and tax payers with a MAGI between $125, 000 and $135, 000. Unfortunately, tax payers with a larger income do not qualify. For states without new car sales tax can also qualify. Deductions would be from other fees or taxes that are a part of new vehicle purchases per unit or sales price by state or local government.
The Auto Assistance Ownership amendment has a federal-income-
For an example of a sales tax deduction, if someone spends $25, 000 on a new vehicle and pays 8% sales tax, then the buyer can deduct $2, 000($25, 000 x 8%), which is an income tax rate of 25%, which will save them $500($2, 000 x 25%). With a trade-in, a lower sales tax will incur and then will make a smaller income tax benefit. This is because, in most states, buyers pay sales tax usually just on the difference between the price of the new car and the trade-in. So if the first example had a$10, 000 trade-in, the deal would have a sales tax of $1, 200[($25, 000 - $10, 000) x 8%], then the income tax savings would only be $300($1, 200 x 25%).
With all the rumor mills, don’t believe the sales tax myths. Sales tax deduction is not only for hybrid vehicles or only to low-income or first time buyers. Also, ARRA does have a sales tax, don’t be fooled. Do not hesitate to come in today and test drive a brand new vehicle to be eligible for this years tax break!
Visit Hare Chevrolet today!
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Hare Chevrolet is located just minutes from Indianapolis. Buyers travel to Hare Chevrolet for the best selection, service and prices on new and used vehicles. We are a family run business that has dedicated our lives to serve our community.
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