There was a lot of press coverage about the federal government’s “Cash for Clunkers” program which encouraged people to trade in their older, less fuel efficient vehicles for a new car. Unfortunately the program did not last long due to funding limitations. Even if you missed out on buying a new car during the relatively short window of cash for clunkers, there still may be some tax advantages to buying a new vehicle this year. Cash For Cars Sydney
The American Recovery & Reinvestment Act of 2009 (ARRA) provided a special deduction for state and local sales and excise taxes on new car purchases in 2009. The law was passed early this year to stimulate the US economy. The special deduction in ARRA is available on purchases of vehicles costing up to $49,500. Taxpayers have always been able to add sales tax paid on new vehicle purchases to their itemized deductions, but now you can add the amount of taxes paid to your standard deduction even if you do not itemize.
High income earners loose out on the deduction as it is phased out for taxpayers with modified adjusted gross income between $250,000 and $260,000 for joint filers and if you are a single taxpayer the phaseout occurs between $125,000 and $135,000. The special deduction is only available for purchases made before January 1, 2010. With the new models coming out for 2010, even if you missed cash for clunkers, there still may be time to check out a new car.