Wilde Toyota

Now that President Obama has signed the economic stimulus package into law, we want to point out a few key features in the American Recovery and Reinvestment Act of 2009.

The Act provides incentives to purchase new cars, including light trucks and SUVs that may allow purchasers to take a federal tax deduction for state and local sales and excise taxes paid on the purchase.

• Deduction is for sales tax on the amount of the purchase up to $49,500 and is phased out for families making over $250,000 and individuals over $125,000.
• Deduction is "above the line"; it may be taken by both itemizers and non-itemizers.
• Sales and excise taxes on lease transactions are not eligible for this deduction
• The new deduction may be available for purchases completed from February 17, 2009 to December 31, 2009.

These provisions offer a typical new-vehicle buyer an estimated $300 to $600 in savings.

Please note that many individual taxpayers in states without an individual income tax (AK, FL, ND, NV, SD, TX, WA) often claim an itemized deduction for state sales taxes. The Act does not allow a double deduction of sales taxes paid on vehicle purchases in these states.

The Act also extends the 50 Percent Bonus Depreciation deductions for business use of vehicles from 2008 to 2009.

In additions, the Act provides a tax credit for families that purchase plug-in hybrid vehicles of up to $7,500 beginning January 1, 2010 to spur the next generation of advanced technology.

Anyone considering the use of these important new tax benefits should consult with their tax advisor to determine the specific amount of benefit, if any, that may be able to be claimed on their federal income tax returns. This does not constitute tax advice and cannot be used by the recipient, or any other taxpayer, for the purpose of avoiding any penalties or interest that may be imposed under the Internal Revenue Code or equivalent state and local laws.

We hope this information has been helpful, and we will share more as we receive it.