Indianapolis Chevy Dealer gives details on State and Local Tax Deduction for New Car Purchase

Nov. 9, 2009 - PRLog -- Hurry in before December 31, 2009, all tax payers will have a deduction for state, local sales and excise taxes when buying a new vehicle in 2009. American Recovery and Reinvestment Act of 2009 (ARRA) gives a tax break if a new car, light truck, motor home or motorcycle is purchased; however, used or leased vehicles don’t qualify.

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-tax deduction, but not for interest on loans. With the tax break, it helps tax payers buy now and get cash back later on 2009 tax returns.

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!

# # #

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.