The tax break for new vehicles (part of the Recovery Act) seems to be a well-kept secret!

Did you know you can deduct state and local sales taxes up to $3093.75 when you buy a new

• Car
• Light truck
• Motor Home
• Motorcycle - defined as electric or gas powered motor vehicle with a seat or saddle and no more than three wheels (so even one of those cool colorful scooters would qualify)

If you have a trade-in, you can deduct the sales tax on the difference, and you can also deduct the excise tax.

This program applies to vehicles purchased between February 17, 2009 and December 31, 2009 so you still have three months to take advantage of this program. And there is no limit to the number of vehicles you may claim the deduction for.

But…

• It has to be a NEW car
• The deduction per vehicle cannot exceed the amount the tax would be on a vehicle over $49,500
• The deduction will be less if your adjusted gross income is in the $250-$260K range for those filing jointly, and in the $125-$135K range for others. Those with higher adjusted gross incomes don’t qualify for this deduction

Need Help?
You can estimate the deduction with the help of IRS Publication 919, "How Do I Adjust My Withholding?" (Lines 10a to 10k on Worksheet 10 take into account purchases above the $49,500 limit, as well as the reduced deductions for taxpayers at higher income levels.)

So whether you itemize your deductions on Schedule A or not, you can take this deduction. If you don’t itemize, you can still add it to your standard deduction.

Look for the form in your 2009 tax package.

For some widgets on different provisions of the Recovery Act please see http://www.marketingexpress.irs.gov/mexpress/widgets/.

(Photo above by Purva Upasak available on Flickr under a Creative Commons license.)