The US Internal Revenue Service (IRS) has reminded individual taxpayers who are considering buying a new car that they have until December 31 to take advantage of a tax break that may not be around in 2010.
Taxpayers who buy a qualifying new motor vehicle this year after February 16 can deduct the state or local sales or excise taxes they paid on the first USD49,500 of the purchase price. Qualifying motor vehicles include new passenger automobiles, light trucks, motorcycles, and motor homes.
According to the IRS, individuals who itemize and those who take the standard deduction can benefit from this tax break. In states without a sales tax, other taxes or fees can qualify if they are assessed on the purchase of the vehicle and are based on the vehicle’s sales price or as a per unit fee.
The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between USD250,000 and USD260,000 and other taxpayers with MAGI between USD125,000 and USD135,000. Taxpayers with higher incomes do not qualify.
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