Make us your home page
Instagram

New vehicle tax benefits

NEW YORK — You bought a car last year and that monthly payment is causing pangs of buyer's remorse. Take heart — that new car could lead you to a refund this tax season. That's because taxpayers who bought new vehicles in 2009 are eligible for deductions or credits that could help cut their tax bills or boost their return. Here's what you need to know. Dan Strumpf, Associated Press

Sales tax deduction

Tucked within last year's economic recovery act is a provision that allows buyers of new vehicles to deduct state and local sales and excise taxes. Those who bought a vehicle between Feb. 17 and Dec. 31, 2009, are eligible.

Most types of vehicles qualify — cars, trucks, motorcycles and motor homes all count. But if your new ride last year was a pricey luxury car, your deduction could be capped. Filers can only claim a deduction for taxes paid on up to $49,500 of the sales price.

So on a $25,000 car bought in a state where the applicable taxes come to 8 percent, that entitles you to a $2,000 deduction.

But your deduction will be smaller if you earn between $125,000 and $135,000 a year, or between $250,000 and $260,000 for married couples filing together. The deduction is eliminated for individuals earning more than $135,000 and for joint filers earning more than $260,000.

The tax break is also available for people living in states with no sales tax, which includes Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon. Filers in these states can simply deduct other fees or taxes imposed by state or local governments, such as a citywide sales tax.

The deduction is available regardless of whether you itemize. Taxpayers who do not itemize can simply add the tax break to their standard deduction on their 2009 return.

The decision to itemize or not will depend on your income. Most tax preparation software and any tax adviser should be able to help you make the decision, said David Sands, tax partner at the New York accounting firm Buchbinder Tunick & Co. "I recommend that people really work it both ways and see what works better for them," he said.

Hybrid tax credit

Recent buyers of some gas-electric hybrids, like the Nissan Altima hybrid, may be eligible for a tax credit. Tax credits can be more valuable than deductions because their value counts as taxes already paid; deductions simply lower your taxable income.

The rules of the hybrid tax credit are a bit more complicated. When the tax credit took effect in 2006, the number of tax credit-eligible hybrids each automaker could sell was capped at 60,000. That means the credit has long expired for hybrids from carmakers like Toyota and Honda, which have been selling popular hybrids for a while.

Eligible 2009 model-year vehicles include certain hybrids made by General Motors, Nissan, Chrysler, Ford and Mazda. Tax credits for these hybrids range from $1,550 to $3,000.

For 2010 model-year vehicles, which went on sale last fall, tax credits are available for certain hybrids made by GM, Ford, BMW, Mercedes-Benz and Nissan. The amounts range between $650 and $3,400. A detailed list of available hybrid tax credits can be found on the IRS Web site.

In addition, double-check with your dealer on whether your vehicle qualifies, Sands said.

A final note: Only new vehicles are eligible for the sales tax deduction and hybrid tax credit; used vehicles don't count. Vehicles bought last year can qualify for both the deduction and the credit.

Next up: plug-in tax credit

There is one tax break that will become more available to car buyers this year: a credit meant to spur purchases of plug-in vehicles. The credit is worth between $2,500 and $7,500.

Vehicles qualifying now include the Tesla Roadster, a high-end electric sports car built by Tesla Motors Inc. that costs about $109,000. But automakers will begin rolling out more moderately priced electric cars later this year.

Nissan has said it will start selling an all-electric car called the Leaf. Although it hasn't announced a price, it will be a good deal less than vehicles like the Roadster. GM, meanwhile, will begin selling the Chevrolet Volt, which is expected to cost about $40,000 after the tax credit.

The cap on this tax credit will be much higher than the hybrid tax credit. Automakers can sell up to 200,000 plug-ins before it expires.

On the Web

IRS details on hybrid tax credit, including eligible vehicles: tinyurl.com/clbayr

New vehicle tax benefits 03/18/10 [Last modified: Thursday, March 18, 2010 9:56am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Record $417 million awarded in lawsuit linking baby powder to cancer

    Nation

    LOS ANGELES — A Los Angeles jury on Monday ordered Johnson & Johnson to pay a record $417 million to a hospitalized woman who claimed in a lawsuit that the talc in the company's iconic baby powder causes ovarian cancer when applied regularly for feminine hygiene.

    A bottle of Johnson's baby powder is displayed. On Monday, Aug. 21, 2017, a Los Angeles County Superior Court spokeswoman confirmed that a jury has ordered Johnson & Johnson to pay $417 million in a case to a woman who claimed in a lawsuit that the talc in the company's iconic baby powder causes ovarian cancer when applied regularly for feminine hygiene. [Associated Press]
  2. Superior Uniform acquires Los Angeles-based PublicIdentity

    Corporate

    SEMINOLE — A subsidiary of Seminole-based Superior Uniform Group has acquired Los Angeles-based branded merchandise company PublicIdentity Inc.

    Superior Uniform Group CEO Michael Benstock
[Courtesy of Superior Uniform Group]
  3. FBI warns of spreading W-2 email theft scheme

    Personal Finance

    The IRS is warning businesses about a sharp increase in email phishing scams involving employees' W-2 forms — scams that can put staffers' Social Security numbers and other critical information in the hands of thieves.

    The IRS is warning businesses about a sharp increase in email phishing scams involving employees' W-2 forms.
[McClatchy DC/TNS file photo]
  4. Walmart expands grocery delivery service in Florida markets

    Retail

    TAMPA — Walmart is formally launching its grocery delivery service in Tampa, the company announced Monday, as it expands its delivery test into Orlando and Dallas. Five locations around Tampa are offering delivery for online grocery orders.

    Walmart is expanding its grocery delivery to Tampa, the company announced Monday. | [Times file photo]
  5. Marina at Hudson Beach poised to become 24-unit condominium-hotel

    Business

    HUDSON — One of the mainstay businesses at Hudson Beach is poised for redevelopment into a 24-unit condominium-hotel.

    The owners of Skeleton Key Marina in Hudson have filed preliminary plans with Pasco County to redevelop the site into a 24-unit condominium-hotel.