Sales Tax on New Vehicle Purchases

The American Recovery and Reinvestment Act provides for new incentives for the purchase of new cars in 2009.  This applies to vehicles purchases after February 16, 2009 and before January 1, 2010.  Taxpayers who qualify may deduct the sales tax (state, local, and excise) on the purchase of new cars, light trucks, motor homes, and motorcycles.  You may claim the deduction for as many vehicles as you would like – there is no limit.  The deduction per vehicle, however, is limited to the tax on a purchase price of up to $49,500 and does phase out for taxpayers at higher income levels.  The nice thing about this sales tax deduction is that it is available regardless of whether or not a taxpayer itemizes deductions on Schedule A. 


About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has owned his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.