The new American Recovery and Reinvestment Act includes an income tax deduction for state or local sales or excise tax paid by buyers of certain motor vehicles. The ground rules:
* The deduction is the amount of tax paid on the purchase of a new passenger car, light truck, or motorcycle with a gross weight rating of not more than 8,500 pounds. Motor homes qualify, too.
* This tax break applies to purchases on or after February 17, 2009, and before January 1, 2010.
* You can claim the tax break if you itemize deductions. If you don’t itemize, you can claim this tax break in addition to the standard deduction. Even if you itemize deductions and deduct state and local income tax payments, you also can take this sales tax deduction for qualified vehicle purchases.
* You can take a full deduction as long as the vehicle you buy costs no more than $49,500. On more expensive vehicles, your deduction is limited to the tax on the first $49,500.
* To get a full deduction, your income this year must be no more than $125,000 (single) or $250,000 (joint return). Partial deductions are available with income up to $135,000 or $260,000, respectively.
