I have been getting a lot of questions lately about the new car sales tax deduction that people can claim for cars bought in 2009. A lot of people are getting ready to do their taxes, and they’re wondering if they qualify for the tax deduction.
In the interest of answering some of the most common questions about the deduction, I thought I’d do an updated Q & A right here.
New Car Sales Tax Deduction Facts
Fast facts about the sales tax deduction, who is eligible, how to claim it and more:
- How much of the sales tax can I claim? State and local sales and excise taxes paid on up to $49,500 of the purchase price of each qualifying vehicle are deductible.
- What kind of vehicle purchases will qualify? Qualified motor vehicles generally include new cars, light trucks, motor homes and motorcycles.
- How big can the vehicle I purchase be? To qualify for the deduction, the new cars, light trucks and motorcycles must weigh 8,500 pounds or less. New motor homes are not subject to the weight limit.
- When do I have to purchase my vehicle? Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
- What if my state doesn’t have sales tax? Purchases made in states without a sales tax (such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon) may also qualify for the deduction. Taxpayers in these states may be entitled to deduct other qualifying fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee. Details here.
- Do I have to itemize to claim this deduction? This deduction can be taken regardless of whether the buyers itemize their deductions or choose the standard deduction. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.
- Is there an income limit to claim the credit? The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
- If I don’t itemize, is there anything additional that I need to fill out? Taxpayers who do not itemize must complete Schedule L, Standard Deduction for Certain Filers to claim the deduction.
- Can I claim more than one deduction if I buy more than one car? Yes. There is no limit on the number of cars for which you can claim the deduction, provided each car is a qualified vehicle under the law.
- Can I take this deduction for any qualified vehicle — even those made by foreign car companies? Yes. As long as it is a new car and otherwise qualifies, you may take the deduction.
- Can I claim this deduction on a used car, or on a leased vehicle? No. Only qualifying new vehicle purchases are available to receive the deduction.
Do you have further questions about the tax deduction that we can answer here? Leave us a note in the comments!
A car dealer has told me the program has been extended beyond Dec 31 2009. Is that true?
Peter Anderson says
I’m not aware of a deduction being extended beyond 2009. The only language i can find on the IRS site and elsewhere is this:
This deduction applies to vehicles purchased after Feb. 16, 2009 and before Jan. 1, 2010.
If you find anything that says something to the contrary, please come back here and let us know!
Marge Gagnon says
Was this sales tax deduction on new vehicles just put into affect in 2009 or was it for 2008 as well???
Peter Anderson says
Sara Edmonds says
If only the dealership used the car and I bought it with 13,000 miles on it, is it considered to be used? Might sound silly, but need to know.
I purchased a 2009 Corrolla which was previously owned by a rental car company. 30K miles. Do I qualify?
In order to get the auto tax refund do I need to know the exact amount I paid in tax on my new car.
Nick T says
Does a “lease” for a new 2010 vehicle qualify for the tax credit or does it have to be a “purchase”?
Peter Anderson says
It must be a purchase. Only qualifying new vehicle purchases are available to receive the deduction.
Can you claim this more than once? I purchased my vehicle in June of 2009 and declared it on my 2009 filing; can I claim it on following years or only once. Thank you very much.