The new car tax credit was included on the 2009 stimulus package, and it’s causing a lot of confusion for a lot of people. I’ve studied the brief IRS explanation and several other sources to figure out how the credit works.

New Car Credit Eligibility Dates
The credit applies to new cars purchased between February 17, 2009 and December 31, 2009. That means the purchase must be completed, not that you’re working on a deal on December 31. If you completed the deal on February 16, you’re out of luck.

Qualifying Vehicles
New cars, light trucks, motor homes, and motorcycles qualify. Used or pre-owned cars do not, even if it’s “new to you.”

Qualifying Purchase Price
Here’s the tricky part. The credit is limited to the taxes on vehicles with a purchase price up to $49,500. You can buy a more expensive car than that, but you can only deduct the taxes on $49,500 of it. That’s still a pretty penny if you live in a high sales tax state.

Qualifying Income
The income limit is high enough that nearly everyone will qualify. The credit starts to phase out at $125,000 for individuals and $250,000 for couples. Once you reach $135,000 and $260,000, respectively, you no longer qualify.

Eligible Taxes
Although there was initial talk of including loan interest, the credit is limited to the sales, local, and excise taxes associated with the purchase. The IRS estimates that will be about $1500 on a $25000 car, but it does depend on the prevailing tax rate in your state and city. See the first comment for a better explanation of the actual value of the credit.

As of June, 2009, the IRS has clarified that fees collected by states that don’t collect sales taxes will qualify for the credit.  These states include Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon. Please consult the IRS to find out precisely which fees are eligible in those states.

How to Claim the New Car Tax Credit
You don’t receive the credit when you buy the car, so you should still bargain for the best deal you can get. You’ll receive the credit when you file your 2009 taxes, which are due on April 15, 2010. The credit is considered an “above the line” credit, so you don’t need to itemize to receive it. It also reduces your taxable income, rather than the tax due. That means your total savings will be more than less than the credit itself. If you itemize your taxes, include the sales tax on schedule A. If you don’t, complete 1040 Schedule L to determine your deduction. Note: there are two Schedule L’s. You want the one associated with form 1040 (linked above), not the one associated with form 990.

The Bottom Line
Here’s the bottom line: the credit may or may not be worthwhile to you. If you were considering a late model used car, then you need to compare the difference in price of the used car and the new car, as well as the taxes on the new car. If the used car is significantly cheaper than the new car, the credit may not actually save you money. However, if the difference in price is about the same as the tax on a new car, then the credit could ultimately make the new car a better deal. With the new car, you’d not only receive the credit, but you’d avoid major maintenance and repair costs for longer. However, you do need to factor in higher loan payments, registration fees, and insurance costs.

My best advice is to shop for a car as you normally would, and then see if the credit is a deciding factor after all other factors are considered.

Comments

304 Responses to “How the 2009 New Car Tax Credit Works”

  1. Jason on March 3rd, 2009 9:37 am

    Long-time reader, first-time poster.

    I think that you are a little confused by the changes. In particular, I think that your analysis includes some items from the Senate bill and some items from the final law.

    First, per the IRS, it is not a tax credit, but a deduction. Deductions are a reduction in your taxable income. Credits are much more valuable because they are direct reductions in the tax you pay. For example, a deduction of $1 means that you save $0.35 on taxes if you are in the 35% tax bracket. A credit of $1 means you save $1 in taxes, no matter what your tax bracket.

    Second, the estimated savings of $1500 on a new $25,000 car was based on the proposal, not the final law. As you noted, the original proposal included a tax deduction for car loan interest. However, it was left out of the final law. From Sen. Mikulski’s (amendment author) website (http://mikulski.senate.gov/_pdfs/Press/autoownershiptaxamendment.pdf), the $1500 savings was broken down into $420 savings from sales tax deduction and $1133 savings from interest deduction. Since the interest deduction was left off, the savings for the average family is only $420.

    Third, because it is “above the line,” the tax saved will be significantly less than the sales tax paid. Imagine I paid $25000 for a car. Using the Senator’s assumption of 6% sales tax, I would have $1500 of sales tax that I pay at the time of the purchase to the state. This is how Sen. Mikulski can say that that this would increase state sales tax revenue. However, when I got around to filing my taxes, I would get to subtract $1500 from my income. This would reduce my federal income tax by the above $420. So, even if the federal government cuts the state benefits by the same amount as the tax cut, the state would still be up by $1000.

    Sorry for the long diatribe. Your best advice is spot on. Shop for a car as if this tax savings didn’t exist, because for most of us, the savings would be less than 1 car payment.

  2. Harley on March 15th, 2009 5:05 pm

    Nice clarification by Jason. You are right on. A tax credit would put nice bucks right back into your pocket.
    The deduction is a lame attempt to get people to purchase a new car. I just purchased a new car and the “deduction” for me will be about $460. This is not much of a “Stimulus”. I guess it is better than nothing but it is not going to make people go out and buy a new vehicle.

  3. Valerie on March 18th, 2009 6:56 am

    Thank you Jason, as well as the Sound Money Matters web-site. This just reiterates how little the little guy matters (still, in our OBAMANation). Hopefully more people will be able to voice their feelings…

  4. 8 (or more) Ways to Benefit from the ARRA - Consumerism Commentary, personal finance since 2003 on March 20th, 2009 5:04 am

    [...] Trucks are included, too. If your income isn’t too high (taxable income of $125,000 / year or $250k for couples filing jointly), you can deduct the sales tax on a new vehicle. Read more (especially the first comment) at the Sound Money Matters blog. [...]

  5. Aprel on March 22nd, 2009 3:29 pm

    So people that live in NH and don’t pay a sales tax or excise tax, but pay a “registration tax” that equals the same don’t get to deduct anything? Wow that’s lame.

  6. Jeff of Peoria on March 23rd, 2009 9:23 am

    The Ol’ US Government “SLIGHT OF HAND” Classic!!!

  7. Aryn on March 23rd, 2009 2:26 pm

    I’m not 100% certain, but I believe a portion of the registration fee is already deductible if you itemize your taxes.

    But I totally agree with the principle of your complaint. I have the same issue with the childcare tax credit. It automatically rules out people who live in high-income states because we have high incomes, ignoring the fact that everything else also costs us more. It’s not like we have a bunch of extra disposable income because we make more than an arbitrary cap. Yeah, $150K a year is a lot in Kansas. In major cities like NYC and LA, it’s break even.

  8. bill on March 24th, 2009 5:41 am

    will this credit apply to a new Honda?

  9. Aryn on March 24th, 2009 9:49 am

    Yes, it applies to all new cars, light trucks, motor homes, and motorcycles. You may be confusing this with the existing hybrid tax credit, which I believe Honda no longer qualifies for.

  10. Al on March 24th, 2009 6:49 pm

    I’m purchasing a vehicle for a family member. Even though it will be titled/registered under their name, will I be able to claim the credit?

  11. Aryn on March 25th, 2009 2:12 pm

    Hmmm, that’s a good question, Al. I don’t actually know. I would recommend asking the IRS or a professional tax preparer. My guess is that the person who pays gets the credit, but I don’t know how the IRS plans on verifying purchases.

  12. butch on March 26th, 2009 6:44 am

    Even though Jason explained it very well above, it should be mentioned again for those who missed it. IT IS NOT A CREDIT, but is a DEDUCTION!!! A DEDUCTION is not worth nearly as much money off your taxes as it would have been as a credit for most people.

  13. Alan on March 26th, 2009 8:51 am

    How does this affect leases if at all?

  14. Aryn on March 26th, 2009 10:54 am

    Since a lease is not a sale, I don’t think you’d get a credit.

  15. Loretha on March 27th, 2009 8:20 am

    I have a lease car that I want to purchase but, only if I get a really good deal. I’ve heard in the past that to buy a car you originally leased would cost you more but, I really love the car. My question is, does anyone know if this ‘deduction’ applies to purchasing a lease car? If not, does anyone have the actual website adress where the true article/information is found so I can try to decipher it myself?

    Thanks in advance!

  16. Aryn on March 27th, 2009 10:33 am

    My gut says no, because the car isn’t new. The text of the bill specifies “new cars.” You’d be buying a used car, even though it was used by you. However, I would call the IRS or a professional tax preparer for the final answer on that one.

  17. Jun Liu on March 27th, 2009 1:53 pm

    Please help me out here. Exactly what are the percnetages of deduction are we talking about here? I am assuming it is tax deduction, nolt tax credit?

  18. sora on March 28th, 2009 7:08 am

    I bought a new car this week. Can I get this tax deduction in 2008 filling or 2009 filling?

  19. Jo on March 29th, 2009 1:22 pm

    Thanks for all the discussions. You all cleared up my concerns and answered my questions. That new Honda Civic is now in my sights!

  20. Some Brief Thoughts on the New Car Tax Break | Seattle Bubble — News & discussion about real estate & the housing bubble in the Seattle area. on March 30th, 2009 10:41 am

    [...] Obama is referring to the tax break for any new car purchase (not just American-made cars) that was passed as a part of February’s “stimulus” [...]

  21. Jessica on March 31st, 2009 7:58 am

    I purchased my car on 2-9-09…can i still get the credit?

  22. Donna Klar on March 31st, 2009 1:58 pm

    I heard about the tax incentive and purchased a new car on 2/5/09. A few days prior to my purchase, I heard the incentive was for cars purchased 1/1/09 – 12/31/09 ( specifically stated was for the entire year of 2009.) At that time, it was also mentioned that the interest on the loan would be included in the incentive in some way so I paid half in cash and financed the remainder. Now I found out that I’m excluded from the incentive because I purchased a new car 11 days too early and there was not an incentive at all for finance charges. I feel very cheated. I certainly could have waited 11 days to be included in the stimulas plan. I know the bill wasn’t signed until 2/16/09 but since the talk prior to signing stated the incentive would be for the entire year, why were those of us who purchased new cars prior to the signing be excluded?

  23. Aryn on March 31st, 2009 5:33 pm

    It’s not fair, but the bill didn’t not make the deduction retroactive to January 1. Unfortunately, there is no credit for new car buyers before Feb. 16, 2009 or after January 1, 2009. It’s possible that Congress will change its mind later in the year, but that’s how it stands now. Unlike the homebuyer credit, this deduction can only be taken on 2009 taxes (filed in 2010), so that gives you eight months to lobby your Congresspeople to apply it to all 2009 purchases.

  24. Zach on April 1st, 2009 1:48 pm

    Wow. Even a deduction is still free money. It sounds awfully greedy of people to spite the government for trying something. Seriously its free money. Keep that in mind. also keep in mind that a new car purchase is a luxury for most of us.

  25. Aryn on April 1st, 2009 4:43 pm

    Jun,

    The percentage depends on your tax rate and the value of the tax. It’s not a fixed percent like the tax credit. It is a deduction, not a credit, so it reduces your taxable income, not your tax owed. For most people, it’s just a few hundred bucks saved.

  26. Malc’s Blog » 8 (or More) Ways to Benefit From the ARRA on April 2nd, 2009 12:11 am

    [...] Trucks are included, too. If your income isn’t too high (taxable income of $125,000 / year or $250k for couples filing jointly), you can deduct the sales tax on a new vehicle. Read more (especially the first comment) at the Sound Money Matters blog. [...]

  27. Holly Woltjer on April 4th, 2009 8:53 am

    I am considering purchasing a 2008 Accord. The car has been at the dealership and was never been owned by a private party? It’s simply “left over” from last year. Does this qualify?

  28. Aryn on April 6th, 2009 9:55 am

    Hi Holly,

    I believe it would. The bill didn’t specify a model year, just specified that it had to be new.

  29. Rob on April 10th, 2009 4:56 pm

    Hello – could someone help me break it down a little further. I am evaluating whether it makes sense to buy a new car I am thinking may help take advantage of this deduction:

    Car price $14K
    State tax: 6.5%
    Income:$40K
    My current deductions on an average fed filing is about $9.5K
    Would I benefit in purchasing a new car in terms of dollars?
    Thanks much!

  30. Aryn on April 10th, 2009 5:37 pm

    Hi Rob,

    First there are additional taxes on cars. You may also have to pay local tax as well as excise taxes. The state taxes alone on that car would be $910. Assuming the 15% tax rate, the deduction would save you about $140 on your taxes (not factoring in local and excise taxes that would increase the deduction somewhat.)

    A new car doesn’t offer a huge tax benefit, so I wouldn’t buy a new car just to get the tax break. However, if you needed a new car anyway, and were trying to decide between new and used, then the deduction could be important. Also important are all the incentives available with new cars right now. You may find that you can get a new car for almost the same price as a newer used car, but with a full warranty.

  31. Bob on April 13th, 2009 2:42 am

    I’m retired and have a modest income. With auto prices coming down in price it becomes more attractive to purchase a new car. And with the some of the hype I’ve been hearing, I won’t pay any sales tax on this new purchase. Also I feel if it helps get this country going again and put people back to work, then that would be a win, win, situation.

    However, reading some of the comments on this site about the sals tax, are a lot different than the car salesman had me believe.

    Whether it’s a tax deduction, or a tax credit, if I don’t earn enough money to even pay taxes, THEN THIS SO CALLED STIMULUS FOR THE PEOPL, THAT THEY PAY NO SALES TAX ON THE PURCHASE OF A NEW CAR IS REALLY A PLAY ON WORDS, AND A FURTHER BIG JOKE THAT WAS TOUTED BY THE ONES WHO REALLY MAKE OUT; THE GOVERNMENT AND THE AUTO INDUSTRY. BECAUSE, A DEALER TOLD A FRIEND OF MINE BACK IN EARLY MARCH THAT THE SALES TAX WOULD BE RETURNED TO HIM IN THE FORM OF A REBATE!

    HOW SAD IS THAT?

  32. Herman on April 17th, 2009 5:39 pm

    Government decieving the people with a play of words!! what’s new!! Jason, thanks for the info, I was misleading my friends with what the IRS was giving us!! Ass………….

  33. Guy Crawford on April 18th, 2009 1:29 pm

    My pickup old pickup is ready to be replaced. I’m looking at new pickups. What is the definition of “new”? I have found dealers that still have new 2008 models on the lot and at considerable discount. Are these new, even though they were model year before the 2009 tax law? Would the tax benefit be better on a 2009 than the discounted 2008?

  34. Aryn on April 20th, 2009 9:38 am

    Hi Guy,

    The law doesn’t specify a model year, just that the car be new, as in not pre-owned. To be safe, I recommend calling the IRS for confirmation that 2008 and 2010 model years apply (since 2010s can hit the market as early as May 2009.)

  35. Mike on April 25th, 2009 7:08 pm

    If one were to purchase two cars, would you receive the tax credit on both vehicles as long as the total was less than $49500? (OR even if it went over $49500 would one be able to write off up to the $49500 value? the taxes that is)

  36. Aryn on April 27th, 2009 1:12 pm

    Hi Mike,

    I believe that you could take the full deduction for both cars, regardless of the total cost of both cars combined. However, since the IRS can be a bit tricky with these things, I would call and ask them first.

  37. Anthony on April 30th, 2009 6:35 pm

    How come the tax credit only applies to purchases after Feb 17, 2009? What about vehicles bought in January 2009? I purchased a new vehicle in January 2009 and find it very upsetting that I cannot even get a small tax credit.

  38. Aryn on May 1st, 2009 9:19 am

    Anthony, the bill was signed on February 17. Congress didn’t choose to make it retroactive in the bill, so it can only apply from the signing date forward.

  39. Phil on May 1st, 2009 7:33 pm

    What is different about this “stimulus” and the sales tax that you could deduct on your tax return for 2008, filed this year?

  40. Phillip on May 4th, 2009 2:27 pm

    It is my understanding that the regular sales tax deduction that has been in place for the past two years will also be in place for 2009. If you buy a qualifying new car in 2009, are you able to take the new car tax deduction and the regular sales tax deduction!??

  41. Aryn on May 4th, 2009 3:52 pm

    I believe this varies by state, Phillip. I don’t currently itemize, but my understanding is that people who itemize their Federal taxes can deduct either state income tax or state sales tax, but not both. I doubt you would be able to deduct the car sales tax twice if you live in a state without income tax and itemize to claim the sales tax deduction.

    Check with the IRS before getting creative with your deductions!

  42. david brown on May 9th, 2009 8:43 am

    What happens after the $125,000 taxable income is reached for a single wage earner?

  43. Aryn on May 11th, 2009 2:23 pm

    The deduction amount is reduced if you earn between $125K and $135K. It steps down by a percentage, depending on how close you are to the cap (similar to the student loan deduction phase-out.) At $135K, the deduction is not permitted.

  44. ChrisC on May 16th, 2009 1:02 pm

    On the question of whether the deduction would be available for a lease, it depends on the terms of the lease. Most leases do not involve a transfer of title to the lessee, but rather the financing company gets the title. So even though the leassee “pays” the tax indirectly, the leassee probably can’t tax the deduction. But some companies, like GM finance, have used a “smart lease” program, which is like a reverse lease – the leassee takes title to the car but is obligated to either pay it all off or turn the title over at the end of the lease term. In that case, I think the leassee could get the benefit of the exemption.

  45. Tammy on May 16th, 2009 7:00 pm

    I’m stoked because I bought new a car last month and just found about the tax credit. Yay me! I had no idea and now I get a little extra cash…sweeeeet!

  46. Bill Z. on May 21st, 2009 11:57 am

    My wife and I are in the market for a new car. One of the dealers we went to has a brand new left over 2008 model, without any miles on it. Would this deduction apply to this vehicle?.

  47. Aryn on May 21st, 2009 4:57 pm

    Hi Bill,

    I believe it would. The text of the law specified the time period the deduction applied, but not a model year, because 2008-2010 cars can be available new in 2009. The key is that it is brand new, not pre-owned.

  48. Rich on May 22nd, 2009 6:54 am

    There may be no easy answer to this one. I live in Delaware. I plan to buy a car today. Delaware DMV provides a “Fee Calculator” for new car buyers. The calculator lists no line item as “sales, local, or excise tax”. Instead it has a 3.75% “Document Fee”. I wonder if it can be deducted on my 2009 Federal tax return? I may be in the same boat as the folks in NH. I plan to check with the IRS anyway?

  49. Aryn on May 22nd, 2009 10:09 am

    Hi Rich,

    I’d definitely go to the IRS with that one. They may have some sort of special classification for states that don’t charge a traditional sales tax, but have other “fees” that basically amount to a tax.

  50. Alan on May 28th, 2009 8:27 am

    Does anyone know if this allowable deduction is given based on Adjusted Gross Income or on Taxable Income?
    Thanks,
    Alan

  51. AYJ on June 2nd, 2009 1:21 am

    IR-2009-30, March 30, 2009

    WASHINGTON — The Internal Revenue Service announced today that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year.

    “For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.”

    The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.

    The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

    IRS also alerted taxpayers that the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction.

    The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns

  52. Thomas on June 2nd, 2009 12:43 pm

    Why in all that’s sacred do they call it a Tax Credit? It’s a Tax DEDUCTION!!!!!Once again the Government really doesn’t do much for the working stiff.Take, take, take…Clinton had the rigth idea….abolish the IRS.Pay a flat tax.

  53. Aryn on June 2nd, 2009 1:27 pm

    Hi Alan,

    See the press release just after question – it’s off Modified Adjusted Gross Income, which is a somewhat tricky number to determine.

  54. Luis on June 4th, 2009 7:19 am

    I am totally disable, my income is non taxable, Social Security Disability. I will not have any tax liability. So I wont be able to take advantage of the tax “stimulus”?

  55. Kevin on June 8th, 2009 6:21 am

    So basically, if I try to get an affordable new car (around $17000 or so) I’ll see about $280 saving on my taxes. Meh. I might as well wait.

    Oh and to Zach, its not “free” money. Its a small portion of YOUR money they are giving back to you.

  56. Aryn on June 8th, 2009 4:47 pm

    Luis, you must have a tax burden in order for the deduction to be of use to you. A deduction reduces your taxable income, while a credit eliminates a portion of the tax due. Credits are often (not always) refundable, so you can get money back even if your tax burden is 0, but that’s not true of deductions.

  57. Jim on June 11th, 2009 12:54 pm

    There have been some comments related to whether or not the tax deduction applies to a “new vehicle” lease but I am still confused. The price of a lease includes sales tax in the calculation of the monthly lease payment. Can you clarify whether or not any tax deduction is available for those of us who lease rather than purchase a new vehicle?

  58. Kurt on June 12th, 2009 7:25 am

    Ayrn,
    the 3.75% “document fee” sounds like a fee that your dealership charged you for doing the paperwork. Sounds pretty steep to me. I am a small dealer in the midwest and we charge $25 for this. If you paid 20k for the car, this means they charged you $750 to process the papers. Make sure you know what you are paying for! There are some class action suits being waged against dealerships doing this type of thing. And no, you can’t write this portion off, only the sales tax.

  59. Aryn on June 12th, 2009 9:54 am

    Hi Jim and Kurt,

    Jim, I don’t believe the credit applies to a lease because it’s not a purchase, but check with the IRS for full confirmation.

    Kurt, the commenter was referring to a charge shown by Delaware’s DMV calculator, so it’s a state fee, not a dealer fee. States that don’t have sales tax often find another way to “tax” car purchasers.

  60. Jerry on June 12th, 2009 4:56 pm

    Hi
    Now that I understand that this is a tax deduction and not a credit, I have a few questions/ issues. First, did not the tax years already allow a tax deduction for thew sales tax on the purchase of any large purchase (even preowned)? What is the difference between that provision and the new one allow in the stimulous package? Second, if the new gas guzzler tax credit is passed, will this affect that tax credit in any way? Will this be on a line on the Federal 1040 that does not require you to itemize? What can you tell me about the proposed tax credit for gas guzzler car trade in? I understand that the car must get no better than 18 mpg and that the new car must get 10 or more mpg than the car that was traded. Is this based on the guzzlers EPA rating for that year? What if the car is older than EPA ratings. Thank you

  61. Aryn on June 12th, 2009 5:12 pm

    Hi Jerry,

    On the Federal form, you can choose between state income taxes or sales taxes if you itemize, but not both. This allows you to deduct state income taxes and the car sales tax.

    The Cash for Clunkers is not a tax credit. It’s a voucher system that you apply for with the dealer – it basically discounts the amount you pay by $3500-$4500. The minimum is 18 MPG for the EPA rating for that year, but the MPG you have to increase varies by a number of factors. I break it down here: http://www.soundmoneymatters.com/cash-for-clunkers/

  62. Sally Cannon on June 15th, 2009 9:55 am

    I bought a new car in January to downsize from my Hummer to a more gas efficient car and thought since I am in Delaware I won’t qualify for the credit, now they say states that don’t have sales tax can qualify, but only after 2/17/09. That sucks, it should be for the 2009 tax year! Thanks for nothing!

  63. Dena on June 22nd, 2009 11:05 am

    I just bought a 2009 honda accord for $24,000. How do I get this deduction? Do I just tell my accountant when I do my taxes in 2010 for 2009? And will he know what I am talking about?

  64. Aryn on June 22nd, 2009 11:20 am

    Yes, Dena, tell your accountant that you bought a car this year and provide him with the necessary documentation so he can complete that line on the form.

  65. Debra Lewis on June 23rd, 2009 6:33 am

    I am confused. Someone told me that you must have a certain amount in deductions before this would benefit. Since, my husband and I do not have many deductions, no mortgage or children do we still qualify for the tax deduction, will it make any kind of dent in our tax burden?

  66. Aryn on June 23rd, 2009 10:04 am

    That person probably assumed that you had to itemize your deductions in order to receive this one.

    That’s not the case. This is an above-the-line deduction, meaning it will be on standard form 1040. You don’t need to itemize your deductions to qualify for this one.

    It won’t, however, make a huge dent in your tax burden. Probably a few hundred bucks at the most. If you already planned to buy a car, consider this a nice bonus for buying new. If you don’t plan to buy a car, then this shouldn’t change your mind.

  67. Lindi on June 24th, 2009 7:49 pm

    will a purchase of SUV qualify for the deduction?

  68. Aryn on June 25th, 2009 9:33 am

    Yes, as long as the SUV is new. However, if it costs more than $49,500, you can only deduct the sales tax up to that limit.

  69. Andy on June 29th, 2009 8:32 pm

    The other piece of good news is that you can claim all 3 government auto programs together.

  70. Chung on June 30th, 2009 9:24 am

    Would a new car purchased through the European Delivery program be qualified for this tax credit? The vehicle is still a brand new vehicle except that the delivery method is not conventional.

  71. Aryn on June 30th, 2009 9:50 am

    Chung, that I don’t know. You’d have to ask the IRS about it. My guess is no, because you’d be paying any sales tax in Europe, not a US state.

  72. Toria on July 2nd, 2009 9:22 pm

    For the people calling it “free money”. There is no such thing. It’s tax payers dollars funding this and any other “stimulus” out there. By the time Barrack Hussein Obama is out of office we’ll all be up to 50% income taxes. Great “stimulus” package!

  73. dan-o on July 8th, 2009 10:11 pm

    Can i trade a car in for a truck?

    Could i just buy one of my buddies car which is a clunker and use that?

    I am also going to move from OR to WA. Oregon does not have sales tax Washington does. Is it better to buy in OR and transfer to WA?

  74. Aryn on July 9th, 2009 10:00 am

    You can trade in a car for a new truck and claim the sales tax deduction.

    I believe you must have owned the car for one year in order to qualify for cash for clunkers. If you mean you want to buy a car from your friend and claim the new car deduction, no, it’s only for new cars.

    If Oregon has a registration fee similar to a sales tax, then you can use that instead of sales tax for the deduction.

  75. John Goley on July 12th, 2009 11:32 am

    What about the credit for buying a new car that gets significantly better miles per gallon than the one being traded in that gets less than 18 miles per gallon. Thanks, John

  76. Andy on August 3rd, 2009 1:47 pm

    this question might be asked b4. saying the car i m going to buy is 55,000. am i still qualify for the deduction of tha max 49,500 , or i wont qualify at all? (regardlss all other limitation because im sure i meet those requirement) ! i have done some researched from other sites and they said YES, upto 49,500.
    thX for ur time Aryn

  77. Ben on August 3rd, 2009 2:27 pm

    I bought 2009 “demo” car from a Hyundai dealership in Van Nuys… It had 3700 miles on it.. But as far as I was told it was just used by the Dealer as a demo car/errand runner at the dealership.
    It was treated like a new car in the sales process.. i got the full 10 year warranty.. and 0 percent interest. (things you don’t get on used cars). BUT, i remember when I signed the paperwork.. It said USED at the top of one page… And they said it was just a formality.. And since it had miles on it and was USED by the dealer they couldn’t mark it was NEW…

    Now my question is.. Since I’m the first REGISTERED owner outside the dealership.. Can i still claim the sales tax write off?

  78. Aryn on August 3rd, 2009 4:52 pm

    Andy, yes, it’s up to 49,500, even if the car costs more.

    Ben, you’d have to call the IRS with this one. I’m not sure how they determine used or new wiht dealer cars.

  79. jim on August 10th, 2009 1:18 pm

    I think the CARS program is discriminatory as it rewards the polluting gas guzzlers and denies federal money to guys like me just for being environmentally conscious by driving a 1999 model that has a fuel efficiency of 26 miles/gl combined

  80. Josh P on August 11th, 2009 10:11 am

    I just bought my wife a New 2009 Chevy Tahoe LT to replace her 2004 Nissan Xterra. Besides deducting the sales tax, does this purchase qualify for the New Car Tax Credit or the Cash for Clunkers program?

    Thanks!

  81. Aryn on August 11th, 2009 1:29 pm

    Hi Josh,

    The Cash for Clunkers rebates filter through dealers, not through your taxes. The dealer should have told you if your deal qualified. However, the XTerra likely had a trade-in value of more than $4500, so the program wouldn’t have been a good deal for you if you did qualify. In addition, the Tahoe isn’t on the government’s list of qualifying purchase vehicles.

    The sales tax deduction including on your 2010 taxes is the new car tax credit.

  82. reyes on August 12th, 2009 11:18 am

    Hello, i bought a new car under cash for clunkers program, do i still qualify for the tax deduction on the new car on my 2010 taxes? Thanks for your time.

  83. Aryn on August 12th, 2009 1:53 pm

    Yes, Reyes, you do still qualify. The two programs are unrelated.

  84. B Price on August 16th, 2009 11:16 am

    Does whether or not you finance the new vehicle figure in who can take benefit of the sales tax deduction? There are many 0 financing offers at this time that might make financing a consideration over cash.

  85. Aryn on August 18th, 2009 9:50 am

    Sales tax is sales tax, regardless of how you pay for the car. In the original version of the bill, interest on loans was also deductible, but it’s not now, so it has no impact on the deduction.

  86. Merida on August 19th, 2009 12:01 pm

    Hello,
    I bought a new 2010 Honda Pilot on July 2009, the dealer stated that my 1998 Chevrolet Blazer was not good for trade-in since it wasn’t worth anything and it was best to sell it out on my own. would I qualify for the deduction for my 2010 SUV? What about the Cash for Clunkers, did I lose out on this?

  87. Aryn on August 19th, 2009 1:37 pm

    Yes, your new car qualifies for the sales tax deduction. Your trade-in was eligible, but your new car may not have been. It also wasn’t available until July 24, so you wouldn’t have been eligible if you bought before then.

  88. States that charge tax for tax-free cars? - SRT Forums - SRT4, SRT6, SRT8, SRT10 & Dodge Forum on August 21st, 2009 1:19 pm

    [...] the price paid on the car. IRS page on it: Sales Tax Deduction for Vehicle Purchases Other info: 2009 New Car Tax Credit So looking at the 2nd link, since it’s a deduction and not a credit, you’ll only get $0.15 back [...]

  89. Toni on August 24th, 2009 11:41 pm

    If I purchase a new car for my relative who is resident in other state, can I get Fed sale tax deduction only or both Fed & local/state sale tax deductions or no sale tax deduction?

    Thank you in advance.

  90. Aryn on August 25th, 2009 9:51 am

    It depends. I’m assuming this is a gift for the relative, and not a deal where you buy it and the relative pays you back. If you bought it as a gift, you can deduct the sales tax on your Federal taxes. Your state sales tax deduction depends on the laws of your state.

    If your relative pays you back for the car, ethically you shouldn’t take any deduction because you didn’t buy the car. Your relative did.

  91. Joanne on September 5th, 2009 8:13 pm

    If I buy a 2010 model in 2009 will it qualify for the 2009 tax credit?

  92. Aryn on September 8th, 2009 9:28 am

    Joanne, yet is will qualify.

  93. Todd on September 11th, 2009 5:36 pm

    Im confused. In regards to the sales tax refunds if you buy a new car, do you get back a percentage or do you get back dollar for dollar???

  94. Aryn on September 14th, 2009 9:30 am

    Hi Todd,

    You get back a percentage because it’s a deduction from your taxable income. So, if you’re in the 25% tax bracket you’d save about 25% of the sales tax you paid.

  95. Steve on September 18th, 2009 9:32 am

    If you finance a portion of the sales tax, can you claim the entire amount or just the amount paid? Based on sales tax in my area, the tax on a $25k car would be about $2000. If I only put down $1000 and finance the remainder, can I still claim all $2000?

  96. Aryn on September 18th, 2009 9:42 am

    Hi Steve,

    The sales tax applies to the whole purchase, not just the financed amount of the purchase. In this case, you’d be financing roughly $26,000 and putting $1,000 down on the purchase. So yes, you can deduct the entire sales tax.

  97. DAn on September 19th, 2009 10:45 am

    What is the interplay between the new car tax credit and AMT and the phase out the standard deduction? I am a joint filer, live in a high tax state (CA) and usually pay AMT. I will report an AGI of between $160k and $180k and can influence which number I’m closer to. Does it matter?

  98. Sudhan Misra on September 19th, 2009 6:58 pm

    We have a small business. If a new car is bought in the name of the business how will the sales tax be handled.

  99. Aryn on September 21st, 2009 10:04 am

    Sudhan,

    This one you’re going to have to call the IRS about because there are different ways to file taxes as a small business.

  100. Aryn on September 21st, 2009 10:05 am

    Dan,

    You’ll have to ask a tax pro about that. I only know how the deduction works for standard filers.

  101. sara on October 8th, 2009 10:48 am

    I am wondering when did this new credit start? I purchased a brand new 09 Vehicle in October of 08 and had no clue about it. My husbands co-worker recieved the credit on the last tax filling season. Can I claim it this year since I didn’t know about it last year?

  102. Aryn on October 8th, 2009 1:24 pm

    Sara,

    The credit started on February 17 of 2009 and only applies for cars purchased after that date. If your co-worker received the credit last season, he either used a different provision that I’m not aware of, or he improperly filed for it. You can only claim the credit for new cars purchased this year (regardless of year of issue)

  103. sebastien on October 9th, 2009 3:42 pm

    I’m considering buying my wife and her horses a Dodge RAM 2500 for personal uses. I not sure how the weight limit works as the law states a max weight of 8500 lbs. What weight is that? The curb weight? This affects both this tax deduction, and the diesel tax credit.

  104. Aryn on October 12th, 2009 10:36 am

    Sebastien,

    That’s one I can’t answer. I would assume it’s the weight listed in the vehicle specs, but you should ask the IRS.

  105. Lale on October 15th, 2009 10:53 am

    I feel I am cheated too. Why cant I get tax credit from buying a new car. I made my prurchase 5 days before bil signed. They mentioned tax credit applies for 2009. I would have waited several days if I knew they were going to be strict about it.

  106. dcm on October 18th, 2009 12:36 pm

    i see a lot of people complaining. several months ago when someone else was president this little bit of help did not exist. why do people continually blame this morass on obama? yes, it will be about a car payment’s worth of savings, unless you plan on having a huge car payment. whatever happened to every little bit helps. if you don’t like it buy a used car. i do feel for the people who bought earlier than this though.

  107. Pam on October 23rd, 2009 8:40 am

    I leased a Kia Soul in May of 2009. Can I get a deduction from this?

  108. Cynthia on October 23rd, 2009 11:23 am

    If I order a Mini Cooper now (October 25, 2009) but it does not arrive to the states (sincej it is custom built) until January 2010, will I still be able to take the deduction on my taxes. I will have signed an agreement with downpayment paid upfront in Oct. 2009.
    Thanks for your help!

  109. Jared on October 25th, 2009 1:24 pm

    I bought a year 2009 car from Carmax with 6K miles on it. So I considered it a used car. However when I went to go finance with my bank, they considered a New vehicle and gave me the finance rate for that because they said it was less than 10K miles and is in the current year. The vehicle was registered/titled to a previous owner. So, I’m confused whether I can get in on this tax incentive or not? So the question is whether the term ‘new car’ absolutely means it has never been registered/titled before in the eyes of the IRS. If anyone knows, please let me know, thanks for your time.

  110. Aryn on October 26th, 2009 9:39 am

    Pam – it’s unclear how the deduction works with leased cars. I would call the IRS to ask.

    Cynthia – If you pay for the car now, then I would imagine you can take the deduction, but you might want to call the IRS to double-check before filing your taxes.

    Jared – Since it’s been registered to another owner, it would be used. The rules for financing are set by banks, not the IRS. However, I recommend you call the IRS to verify this, just in case you do qualify.

  111. J Michaels on October 31st, 2009 9:24 pm

    I have purchased 2 new cars in 2009. Can I claim the tax credit on both of them?

  112. Aryn on November 2nd, 2009 12:42 pm

    J Michaels, yes, you can.

  113. EKG on November 4th, 2009 7:22 am

    So I remain a responsible citizen, borrower and contributor to the economy by first: Not borrowing and maxing my house out to the limit. So no bailout relief for me in that area. And we purchase a new car in January 09 which helped the figures in an otherwise dismal economy but I get no tax deduction. All the while the government bails out the banks and auto companies that got us into this mess in the first place. Fricking amazing.

  114. richard t orton sr on November 8th, 2009 8:53 am

    On June 6,2009 we purchased a 2009 Chevrolet
    Impala with the understanding from the dealer
    that if we purchased a brand new American vehicle we would qualify for a $7,500 tax credit on this year’s tax return. We cannot
    find information on this anywhere. The dealer
    told us we did not need any paperwork other than a bill of sale dated before July 15,2009. Is this program true?

  115. Aryn on November 9th, 2009 11:29 am

    Hi Richard,

    The only $7500 new car tax credit is for plug-in hybrids, which are not currently available for purchase. An American car credit was proposed, but it did not pass. The dealer either misunderstood or lied to you. The only deduction available to your is the sales tax deduction.

  116. S. Martin on November 10th, 2009 1:44 pm

    Is there a limit on how many cars you can buy and deduct in that time frame? If you pay cash for the cars does that qualify.

  117. Aryn on November 10th, 2009 2:46 pm

    I don’t believe there’s a limit on the number of cars you can buy. You can pay cash or finance, it doesn’t matter, because the deduction is on the sales tax, not interest or anything else. Remember, it must be a new car, not previously owned.

  118. Chris on November 10th, 2009 7:31 pm

    So if I am receiving a refund on my taxes this year will this just be added to the refund? The taxes on my new car are about $2500.00

  119. Aryn on November 11th, 2009 4:13 pm

    Hi Chris,

    Yes, the deduction reduces your taxable income, which reduces your tax, so your refund will increase.

  120. dmayes on November 13th, 2009 10:37 am

    Will a certified preowned car qualitfy for the new car tax credit?

  121. Aryn on November 13th, 2009 4:58 pm

    DMayes,

    No, a preowned car is not new, therefore it doesn’t qualify.

  122. Matt on November 14th, 2009 7:39 am

    For those who purchased in 2009 but before 2/17 the article below might make you blow a gasket. It’s dated two weeks before the final passage and indicates that the original provision for the credit included eligibility for purchases made back to November 2008. So someone sees this, goes out and buys a vehicle thinking they’ll get a tax break and then *poof* it’s gone. The lesson is don’t rely on political promises until the bill is signed. We purchased in January and were not expecting any tax break at the time. When we heard we would be eligible for some money we said ‘cool’. I just found out while doing some final tax planning for the year that they moved the date. Oh well. We did get a fantastic deal because the dealers were really hurting in January. Here’s the article…

    http://jalopnik.com/5146133/new-car-tax-credit-added-to-stimulus-package

  123. Joe on November 18th, 2009 9:39 pm

    If you are leasing a car, and you decide to buy out the lease, is that considered a new car purchase? Or is the auto company (Infiniti) who issued the lease considered to have been the first purchaser??? And that makes it a used car??

  124. Aryn on November 19th, 2009 11:45 am

    Joe, this is a question for the IRS. My sense is that it’s probably used, because the original title was issued to the dealer, not to you. But check with the IRS. Maybe you’ll get lucky.

  125. max on November 20th, 2009 8:59 am

    can you purchase a 2010 vehicle and still get the tax deduction

  126. Aryn on November 20th, 2009 11:28 am

    Max, yes. The bill doesn’t state a model year, because years 2008-2010 were available in 2009. Just make sure you buy it before 12/31/2009 or your tax deduction will turn into a pumpkin.

  127. Mike on November 23rd, 2009 2:15 pm

    I live in NJ and understand the sales tax is deductible, how about any other fees that they pile on when you sit down with the finance guy. There are all kind of fees that go to the state under different names.

  128. Aryn on November 23rd, 2009 2:59 pm

    Hi Mike,

    If you live in a sales tax state, only the sales tax is deductible. The fee deduction is available to those in states without sales tax.

  129. JAMES MCKENZIE on November 23rd, 2009 3:18 pm

    I am buying a 2008, will get a tax credit on a Brand New 2008? If yes, where do I get the credit tax forms? Thanks James!

  130. Aryn on November 23rd, 2009 5:57 pm

    Yes, the deduction does apply to a brand new 2008. You will use schedule L to calculate your standard deduction when you file your taxes. It will be available on the IRS site or included with your tax booklet. If you use online tax preparation software, they’ll complete the forms for you.

  131. shawn on November 25th, 2009 9:32 am

    I leased two new vehicles recently. I paid the full amount of sales tax, just like a purchase. Do leased vehicles qualify for the credit? If so, is the credit up to $49,500 per vehicle or the total regardless of the number of vehicles is $49,500?

    Thank You

  132. Aryn on November 25th, 2009 10:56 am

    Shawn,

    My understanding is that it’s per vehicle, not cumulative. I don’t know how it works with leases, though. That’s a question for the IRS. They’re nice people, I promise.

  133. John on November 25th, 2009 9:59 pm

    If I won a $49k vehicle but still had to pay the sales tax on it to get it titled to me do I qualify?

  134. Andrew on November 27th, 2009 11:04 pm

    A car is being built for me now, it may not arrive before the 31st. Do I need to take delivery of the vehicle before then? Or can I pay for it before the 31st and qualify for the credit.

  135. Aryn on November 30th, 2009 10:54 am

    John and Andrew,

    Both questions for the IRS. The law doesn’t say anything about when delivery is, so it could very well be that you can pay for it before taking delivery and still get the deduction.

    As for winning a car, that’s a toughie. It could go either way.

  136. Paul on November 30th, 2009 8:39 pm

    Response to John on November 25th, 2009 9:59 pm

    John/Aryn: I am in the same boat and I am working on checking with the IRS (their walk-in office representatives didn’t know the answer…). If you guys find out the answer, please post it. Thanks!

  137. Christine Parker on December 1st, 2009 8:24 pm

    Hi. I’m considering the purchase of a 2010 Ford Fusion hybrid. If I purchase this vehicle, would I qualify for the hybrid tax credit AND the new tax credit?

    Thanks.

    Christine

  138. danielle on December 2nd, 2009 10:10 am

    if i had a lease in feb 08 ending in 2010 but i bought it nov 2009 does that qualify as a new purchase? i was thinking yes since i was the one that leased the vehicle. any help would be appreciated, i cant find anything on the net, and the tax prep’s i called have no idea, which is kinda scary. thanks.

  139. Aryn on December 2nd, 2009 11:20 am

    Danielle,

    My guess would be no, because you didn’t own the car. The dealer did and you leased it from them. Even though you’re buying the car you leased, you’re buying it used, not new.

    Rather than tax preparers, who may not have received full information yet, call the IRS.

    Toll-Free, 1-800-829-1040
    Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time

  140. jay montgomery on December 3rd, 2009 10:20 am

    Does anyone know if this deduction will be available next year?

  141. Aryn on December 3rd, 2009 11:08 am

    Congress hasn’t said one way or the other, but it seems unlikely. I believe it was a one-time stimulus offer.

  142. Felix Parker on December 3rd, 2009 12:41 pm

    If the new car tax deduction is claimed, how does this impact the calcultion for total sales taxes expended for those individuals wanting to use the state sales tax deduction in lieu of the state income tax deduction when itemizing deductions on Schedule A?

  143. Aryn on December 3rd, 2009 2:17 pm

    Hi Felix,

    I haven’t read the full instructions for Schedule A yet, but I’m sure that will be in there.

  144. Bryan on December 4th, 2009 2:43 pm

    Just wanted to thank you for so much valuable information. The wonders of knowledgeable people on the web.

  145. George on December 9th, 2009 3:17 pm

    Simple question, how much do i get back?? I make 25K a year, so probably fall in the lowest tax bracket. I bought a 32,000$ car at 6% sales tax in August… So, simple question, how much $ do i get back, in dollars, not %, give me a dollar range as if we’re normal people talking about money here, lol.

  146. Aryn on December 9th, 2009 3:55 pm

    George, I can’t guarantee this is 100% accurate, because I don’t know if you’re married, what other deductions you have, and what your AGI is, but I’ll assume you’re in the 15% tax bracket. The deduction should reduce taxable income by $1920 (6%) of $32000, which will result in a $288 reduction in your tax bill. (15% of $1920.) If your AGI places you in the 10% tax bracket, then your savings is $192.

  147. Deutsch on December 12th, 2009 10:53 am

    Does anybody know what the income limit of 125k (250k) refers to exactly?

    Is this the amount after standrad deductions, does it include interest, unemployment or capital gains? I am a bit confused about what the income # refers to.

    Thanks,
    Deutsch

  148. Aryn on December 14th, 2009 11:24 am

    Hi Deutsch,

    It’s AGI, so after some deductions and before others.

  149. Farrell Ghilders on December 16th, 2009 6:53 pm

    A question for the IRS. Get the answer in writing, time, date, who you are speaking with and telephone no. and E-M copy. Things have a way of changing. You may need information to back up your justification for claiming the Credit.

  150. Sachin on December 17th, 2009 9:12 am

    I am going to buy a 2010 car in X-mas. Is it going to give me deduction in tax. Is there any other way to get refund from IRS if I drive my new car below 6000 miles per year?

  151. Aryn on December 17th, 2009 10:31 am

    Sachin,

    Yes, you will receive a tax deduction before buying the car before the end of the year. I don’t know of a tax deduction for driving below a certain number of miles per year. I suspect because the IRS would have a very hard time verifying that.

  152. Gary on December 18th, 2009 5:57 pm

    We are looking a buying a 2009 vehicle @ auction. It is being sold as a “manufacturer’s” vehicle, though it is probably a fleet lease vehicle that was “turned-in” to the manufacturer. Does this qualify? Seems like it would if we were the first titled owners of the car.

  153. Aryn on December 18th, 2009 6:17 pm

    Hi Gary,

    It probably will, although there might be mileage restrictions to qualify as new. Your title may not say new. Check with the seller to find out how it’s classified on the sale documents.

  154. sean on December 20th, 2009 2:30 am

    I bought a new motorcycle on internet e retailer no sales tax paid until i register it and create a title, get plates at court house, thats when I pay sales tax but its winter so I dont want to pay that tax till april so can I estimate it for the deduction?

  155. Glen on December 20th, 2009 8:07 am

    Hello, here’s my situation. My wife has a vehicle in her name and my sister co signed but we make all the payments. Will we still be able to qualify for the tax deduction or will it be my sister? My sisters name is on the contract as the primary owner.

  156. Kathy on December 20th, 2009 11:58 am

    Does a 2010 Toyota Prius Hybrid qualify for this?

  157. Aryn on December 20th, 2009 5:20 pm

    Sean – if you don’t pay the tax in 2009, you don’t get the deduction.

    Glen – It’s tough to say for sure, but I suspect your sister would get the deduction because she’s listed as the primary owner. Call the IRS to ask at 1-800-829-1040
    Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time

    Kathy – yes, that qualifies as long as you buy it before the end of 2009!

  158. Brett on December 22nd, 2009 9:22 am

    Here’s a Q&A at the IRS:
    “Car Sales and Excise Tax Deduction: Questions and Answers”

    http://www.irs.gov/newsroom/article/0,,id=211310,00.html

  159. Aryn on December 22nd, 2009 10:39 am

    Thanks for the link Brett! I think that covers 90% of the questions my readers had!

  160. Obama tax credits for new cars? - PriusChat Forums on December 23rd, 2009 5:37 am

    [...] Re: Obama tax credits for new cars? 2009 New Car Tax Credit [...]

  161. Possible MS3 next summer - Mazdaspeed Forums on December 23rd, 2009 10:25 am

    [...] Not Ranked  :  +0 / -0  0 score      One minor incentive to buying a new car this year (Feb ’09 to Dec 31st ’09) is that you get a slight adjustment to your income tax bracket based on the sales tax of the vehicle. Read more about it here [...]

  162. Casey on December 23rd, 2009 5:53 pm

    Let’s assume I buy a car for $30,000 and pay a local tax of $2,925 (currelty at 9.75%.)

    Assuming that I’m in the 15% bracket, my actual saving will be $2,925 x 0.15 = $438.75. Am I correct or do I need to factor in other things too?

    I thought the savings would be greater, because we pay higher sales taxes, but I guess that doesn’t matter after all. :)

    And Aryn, thank you for helping all these people all year long. :)

  163. Chris on December 26th, 2009 10:42 am

    I purchased a new car in March and unfortunatley totaled it in an accident. I bought another new car in September. Am I able to deduct the taxes on BOTH new cars? Thanks!

  164. kim on December 27th, 2009 8:51 am

    Hello. I purchaced a car with my mother this year. We are both on the title. Can we each file for part of the tax deduction or would only one of us claim this on our taxs? Thanks!

  165. TAX break on my new Harley? - Page 2 - Harley Davidson Forums: Harley Davidson Motorcycle Forum on December 27th, 2009 9:37 am

    [...] Originally Posted by Longo Do I get a tax break on my new Harley I bought back in February under the stimulus plan… According to this, motorcycles do qualify. 2009 New Car Tax Credit [...]

  166. Rich S on December 27th, 2009 7:52 pm

    I purchased a new car in March and then a new car in Sept 09 and then traded them in for a 3rd car in Nov 09. Can I take the deduction on all 3 cars up to the max since I purchased them during the credit period even through I sold 2 of them?

  167. Aryn on December 28th, 2009 10:02 am

    Rich and Chris, I believe the answer is yes, you can deduct all the sales tax for all cars as long as all of the cars were new, not used or leased.

    Kim, I suspect that one of you will have to take the deduction, but ask the IRS directly before completing your returns just to be safe.

  168. Shante' on December 28th, 2009 1:02 pm

    My mother recently purchased a new car for me and put the title in my name. Who would the tax credit go to? My mother who paid for the car, or me since the car is in my name?

  169. Aryn on December 28th, 2009 2:53 pm

    Shante,

    I expect it would go to your mother since she paid for the car, and therefore paid the sales tax.

  170. Pam on December 28th, 2009 5:16 pm

    This is great..but they should really have limited this to AMERICAN cars…why not feed a little bit more money back into helping OUR economy for once…

  171. Aryn on December 29th, 2009 11:17 am

    Hi Pam,

    They considered limiting the credit, but the fact is that many “American” cars are not manufactured in the US, while several major “foreign” cars are. Would you rather get a credit for buying a GM that was built in Mexico or for buying a Toyota that was built in Kentucky?

  172. Mike on December 29th, 2009 5:47 pm

    Hello.

    I purchased a 2009 “new” Jeep Wrangler back in June 2009. I kept it for about 2-3 weeks and traded it in for a 2007 Yukon. Because I started off with a “new” purchase would I be able to deduct anything?
    thanks.

  173. Roseanne on December 30th, 2009 2:58 am

    Thank you President Obama! As promised, another tax break for the middle class. With the payroll stimulus and this reduction of our gross income, that’s about $1200 extra for our family this year. Considering we don’t have to pay tax on this $1200, it is actually equivalent to a $1500 raise in our gross income for 2009.

  174. john Balas on December 30th, 2009 9:04 am

    I will be closing on a new car tomorrow- Dec. 31
    In Missouri- like many other states- you do not have to register/pay the tax for 30 days. Since the car is purchased before the deadline but tax after is it still eligible for the 2009 tax year?

  175. Aryn on December 30th, 2009 12:02 pm

    Mike – The law doesn’t specify that you have to keep the car, just that you have to buy it! As long as you paid the tax, you’re good.

    Roseanne – Congrats! That’s a nice bonus for your family.

    John – I believe you need to pay the tax in 2009 to get the deduction. In California, the dealer registers the car and collects the tax at the time of purchase? Is this an option in Missouri? Can you afford to pay the tax tomorrow? If you can, it might be worthwhile. Even a small tax benefit is better than none!

  176. David on December 30th, 2009 6:50 pm

    I purchased a car with the Cash for Clunkers program in August. What kind of paperwork do you need to verify the purchase of the vehicle? Just a copy of the sales paperwork?

  177. David on December 30th, 2009 6:53 pm

    By the way, I am in the state of HI, so no sales tax.

  178. Aryn on December 31st, 2009 10:24 am

    David, the Cash for Clunkers program is unrelated to the tax deduction. The Clunkers credit was applied to the purchase. To claim the tax deduction, you’ll need a receipt/bill of sale/registration showing the state fees you paid for the car. You can deduct those fees in lieu of sales tax.

  179. Bob McElhose on December 31st, 2009 3:03 pm

    Washington State has no income tax, only a sales tax. Since sales taxes are already deductible, does this deduction affect my return an different if I simply claim this as an itemized deduction rather than a separate line item?

  180. Aryn on December 31st, 2009 3:37 pm

    Bob – it doesn’t make a difference to you. It would only make a difference if you didn’t itemize your taxes, because you can take this deduction in addition to the standard deduction.

  181. Katie on January 1st, 2010 3:21 pm

    My husband bought a Chevy van over the summer. Will he be able to get the deduction?Thanks

  182. Aryn on January 1st, 2010 7:06 pm

    Katie, as long as it’s new, yes, he can take the deduction.

  183. Mike on January 2nd, 2010 7:53 pm

    Wonder if the Obama administration will “renew’ this for 2010?????

  184. Aryn on January 4th, 2010 10:30 am

    Mike, as much as I personally wish he would, because I didn’t buy a new car last year as planned, I doubt it. There are other items in the stimulus bill for 2010.

  185. ATV Tax REfund? Have you heard of this? - Yamaha Grizzly ATV Forum on January 5th, 2010 9:51 am

    [...] 2009 New Car Tax Credit atv’s fall under the “motorcycle” category __________________ ’07 660, BLUE! ’09 550 w/EPS, BLUE! [...]

  186. Brandi on January 7th, 2010 12:47 pm
  187. Amy on January 8th, 2010 12:55 pm

    I live in Washington State and do not have enough deductions to file a long form. Is there a new IRS form to fill out to take advantage of this incentive? I’ve heard 1120L? Any help would be appreciated.

  188. Aryn on January 8th, 2010 4:23 pm

    Amy, you don’t need to itemize to claim this deduction. Your instruction booklet or online software will have information on the proper form and which line on the main form you need to apply it to.

  189. mark on January 11th, 2010 9:22 pm

    I bought a 2009 Dodge Ram truck the sticker on the drivers door says that the GVWR is 9000 lbs so i do not qualify for a tax break the truck cost 44,000??

  190. Aryn on January 12th, 2010 11:24 am

    Mark, unfortunately, no. The weight limit for cars and trucks is 8500 pounds.

  191. mike on January 12th, 2010 5:45 pm

    THIS TAX CREDIT SUCKS I BOUGHT A FORD F150 ON JAN/21/2009 I DONT QUALIFY.

  192. Joan Wolfe on January 13th, 2010 4:55 pm

    What documentation is needed to provide the purchase date if you take advantage of the deduction?

  193. Aryn on January 14th, 2010 10:42 am

    Hi Joan,

    Your tax software or instruction booklet will include the instructions. Your bill of sale should show the date of purchase.

  194. Lee on January 14th, 2010 2:00 pm

    I bought a car this year. My mom signed as the owner and I am the co-signer and I am paying for the car. My mom is on SS# does not file taxes. Will I be the one to get the tax credit or will she?

  195. Aryn on January 14th, 2010 3:03 pm

    Hi Lee,

    Since your mom doesn’t file taxes and you are paying for the car, I believe you would take the deduction.

    If you itemize your taxes, you’ll include the deduction there. If you don’t, you need to complete schedule L.

    http://www.irs.gov/pub/irs-pdf/f1040sl.pdf

  196. nancy on January 17th, 2010 6:20 pm

    i signed for my daughter, she is the co signer for 2009 kia sportage purchased august 2009. Is it okay for my daughter to file for the car tax credit, since she is the one paying on it?

  197. Coleen on January 17th, 2010 8:36 pm

    My daughter and I purchased a new vehicle together and the loan is in both of our names. She is listed first on the title with my name appearing second. Would I be able to take the new car tax credit instead of my daughter?

  198. Aryn on January 18th, 2010 10:37 am

    Colleen and Nancy,

    I believe that as long as only one of you applies for the deduction, either you or your daughters could take it because you’re both on the title.

  199. M on January 19th, 2010 12:47 pm

    Does a Lease buy-out count? Since it was under the dealer this whole time?

  200. Matthew on January 19th, 2010 1:39 pm

    So, when I file my taxes next week I do not have to indicate that I purchased a new car in 2009 and they will automaticly account for this. This is what the article states, but our irs doing this on their own without me providing proof seems uncertain. Is there a way to make sure I get that added/deducted when I file?

  201. Aryn on January 19th, 2010 6:00 pm

    M – I don’t think a lease buy-out counts because the car was registered to the dealer. You would be the second owner.

    Matthew – You complete schedule L or fill in the line on your itemized return to claim the new car tax deduction. You don’t have to submit a copy of the title.

  202. Coleen on January 19th, 2010 6:53 pm

    Thank you, Aryn, for taking the time to respond to my question. I appreciate the information.

  203. Thomas on January 20th, 2010 1:23 pm

    Wow, this really sucks. I bought new car on 2-14-09

    Couldnt I just say I bought it on the 17th?

  204. Michelle on January 20th, 2010 7:46 pm

    Wow, the IRS knows how to mess with people when in it comes to giving money back, don’t they. I think this is crap!

  205. Veronica on January 20th, 2010 8:29 pm

    I file married joint and make about $120k. I bought a new truck in November 09 and want to know how much i would get back in dollar amount not percentage…please. Amount financed was $44k and i paid $3,500 in sales tax..ouch!Only in sunny Ca.

  206. Aryn on January 21st, 2010 10:47 am

    Hi Veronica,

    Unfortunately I can’t tell you what specific dollar amount you’ll get because I don’t know which tax bracket you’re in after other deductions. My guess would be a tax reduction of about $875 if you’re in the 25% bracket (25% of $3500.)

    There is no deduction for the loan interest, only for the sales tax. Also, I don’t know if the car was more than $49,500. If it was, some of that sales tax is excluded.

    Fortunately, you can file your taxes as soon as you receive your W-2s and other income/deduction documents, so you’ll can find out for sure by the end of the month!

  207. Ashley Gengler on January 21st, 2010 9:55 pm

    Ok, so I purchased a 2009 Kia in April 2009, brand new. My mom called me and told me I could claim it on my taxes. Exactly how is claiming my car on my taxes going to do anything for me? Is it a deduction or a credit? And how do you know how much to put on the tax form? I simply don’t understand why they have to make things so complicated.

  208. Aryn on January 22nd, 2010 10:57 am

    Ashley, it’s a deduction. You deduct the sales tax. The post above explains which forms you’ll need to complete to claim the deduction, or if you use tax software, it will do it fore you.

  209. Brian on January 22nd, 2010 11:04 am

    The new car tax deduction unfortunately does not apply to leases. That makes me unhappy since I leased a new VW Jetta late last year. However, from what I am seeing here, I am pretty sure we will save more through the deal we worked out (lease-to-buy vs. straight up 6-year financing) than we would have saved from this deduction.

    You can get the official answer from the IRS FAQ on the deduction, located here: http://www.irs.gov/newsroom/article/0,,id=211310,00.html. It’s about halfway down the page.

  210. Tom on January 23rd, 2010 5:41 pm

    I have a good one. I live in Missouri and
    purchased a new car in June 09. I had
    traded in 2 vechiles. Because the value of
    the trades exceeded the tax 6.795% I did not
    have to pay tax on the purchase. Do I get
    to take the Tax Credit? The no tax is based
    on previous taxes paid on the other two vehicles.

  211. Justin on January 24th, 2010 10:51 pm

    Where do I find the exact amount of sales tax I paid?? I looked on my contract, and the amount on there is only showing like $300 on Sales Tax… How can that be possible?!The tax rate here is 9.25%, and on a $19000 car??! Thanks!

  212. Agnes McZeal on January 25th, 2010 7:01 am

    If I started the procedure to purchase the car on 2/14/09 but did not complete the loan paper work and get approved until 2/20/09, do I still qualify for the tax credit? I did not pick up the car until the loan was approved on 2/20/09.

  213. kim on January 25th, 2010 9:23 am

    Can a renter use the deduction? I was told I must hold a mortgage in order to get the deduction. Thank you!

  214. Aryn on January 25th, 2010 10:44 am

    Tom – if the bill of sale/related paperwork doesn’t indicate tax, then you didn’t pay any and probably can’t take the deduction. IF your bill of sale is unclear, contact the dealer for clarification.

    Justin – bills of sale vary by state and dealer. It could be that your state has a different tax rate for vehicles, or that you paid “fees” rather than taxes. Contact the dealer for clarification.

    Agnes – what date does the bill of sale show? Hopefully it shows 2/20, because that’s when you took possession!

    Kim – yes, renter’s can take the deduction. You do not need to itemize.

  215. BILLY MAYHAM on January 27th, 2010 2:08 pm

    I BOUGHT A NEW CAR JUNE OF 09 AND I WAS TOLD I WOULD GET BETWEEN $1200-1500 FOR THE $26000 CAR PURCHASE, NOW IS THAT TRUE OR AM I ONLY GETTING BACK $400ish… i THOUGHT WE WERE GETTING ALL THE TAXES BACK AS A REFUND… DANG WAS I WAY OFF… ?

  216. Julie on January 27th, 2010 2:27 pm

    I thought the same thing as Billy. I figured I was getting all of my tax money back? From everything I am reading it sounds like I may only get a little back. I didn’t buy the car because of the tax thing, but I was hoping for a nice sum of money at the beginning of the year because of it. Confusing.

  217. Allen on January 27th, 2010 5:50 pm

    I went and purchased a new car at the end of February with the help of my mom, on the paperwork it has her as the signer and me as the co-signer. Am i allowed to file for the deduction or does she have to do it?

  218. Aryn on January 27th, 2010 6:09 pm

    Julie and Billy – this is actually a tax deduction, so it reduces your taxable income, rather than a true tax credit that reduces the tax owed. So, you’ll “get back” a percentage of the tax paid.

    Allen – it doesn’t matter who signed for the loan. It depends on whose name is on the title. If your name is on the title, you can take the deduction. If your mom’s name is on the title, she takes it. If you’re both on the title, choose one.

  219. Allen on January 27th, 2010 6:21 pm

    Ok, just trying to get a better understanding before i file, on the retail installment sale contract that i have, it has her as the buyer and me as the co-buyer .. that means either one of us can file for it?

  220. Aryn on January 29th, 2010 10:11 am

    Allen, by my reading of the instructions, yes. But you can’t both file for it.

  221. Chrissy on February 1st, 2010 4:37 pm

    Hope this helps!

  222. Henry Subia on February 1st, 2010 4:44 pm

    So to be clear, Lease’s do not get this deduction, right?

  223. Chrissy on February 1st, 2010 5:06 pm

    hope it works

  224. Aryn on February 1st, 2010 6:26 pm

    Henry – that’s exactly right. Leases aren’t purchases and therefore don’t qualify.

  225. saho on February 2nd, 2010 1:40 pm

    I sold my a car right before buying a new one this summer. I transferred the plates and therefore had 13k I didnt have to pay taxes on because I transferred my plates. Does this mean I can’t deduct the whole amount or only the un-deferred tax amount?

  226. Aryn on February 2nd, 2010 5:51 pm

    Scott – Look at your bill of sale, which should show the tax paid. That’s the amount you can deduct – I believe. We don’t have that option in California, so I could be wrong about this whole plate transferring thing.

  227. Erin on February 2nd, 2010 6:54 pm

    Can I claim the new car tax credit if I am claimed as a dependent on my parents’ taxes but I still bought the car all on my own?

  228. Aryn on February 2nd, 2010 7:03 pm

    Erin – you have to file a tax return in order to claim the deduction, but I assume you’re employed since you could afford a car. Employed dependents are required to file their own tax returns, so just follow the instructions carefully to calculate your deduction as a dependent.

  229. danny on February 3rd, 2010 11:38 pm

    So has any one filed there taxes? share with us your numbers so we know whats really going on..for what i read it sounds like uncle sam is throwing us crumbs.Why cant we get a nice chunk like first time home buyers,i didnt get jack when i bought my first house.I have an idea lets all stop working get food stamps and then will get money back..our country is great at rewarding failure.

  230. links for 2010-02-05 | Rohit Prabhakar on February 6th, 2010 12:02 am

    [...] 2009 New Car Tax Credit [...]

  231. clif on February 7th, 2010 8:42 pm

    We purchased a 08 light pickup in april 09, we are the only owners on the title. We were told at the dealership that it had been at another dealership as a program car. will it qualify for new car tax credit?

  232. Aryn on February 8th, 2010 12:06 pm

    Clif – It depends on whether the other dealership registered it or not. Does your bill of sale list it as new or used (pre-owned)? If it says new, then you should qualify.

  233. joshua on February 10th, 2010 1:06 pm

    I filed my taxes today….guess what….the tax preparer told me I can’t deduct state/local income taxes AND the sales tax on the two new vehicles my wife and I purchased last year. I had to choose the greater dollar amount between the two as my deduction on my schedule A. WHAT A SCAM….it dropped my return from $2800 down to $1300.

  234. Rick on February 10th, 2010 4:06 pm

    This whole thing blows I bought a 2009 chevy 2500HD for 50000 and don’t qualify because the weight is 9200lbs but someone that has bought a new RV that weighs in way over the 8500lb limit qualifies. Way to stick it to the working man NOBAMA!!!

  235. Aryn on February 10th, 2010 4:58 pm

    Joshua – you may want to see a different tax preparer or run your taxes through an tax software program – this deduction is in addition to state/local income taxes, not instead of. Your tax preparer seems to be wrong.

  236. 2009 New Car Tax Credit | Valencia Auto Center Blog on February 11th, 2010 2:19 pm

    [...] For more information on the tax credit, please follow this link. [...]

  237. Ann on February 13th, 2010 12:50 pm

    I think many of these comments are misleading. I just worked on my taxes and one must use Schedule L to make the new auto sales tax claim. It increases one’s standard deduction, thus you are indeed getting back the full amount of the sales tax. (For a typical auto purchase provided your income does not exceed 125,000 or 250,000 for joint filers.)

  238. BrianR on February 14th, 2010 10:02 am

    Count me as another who bought a vehicle just prior to 2/17. When I bought it, I was under the mistaken impression that the deduction applied to all of 2009. I’m grasping at straws but looking for a possible loophole. I signed papers on 2/15 but the vehicle did not get registered in my name (and therefore the sales tax did not get paid) until 2/17 due to the RMV being closed on the 15th and 16th. Any chance I can still qualify for the deduction?

  239. Aryn on February 16th, 2010 10:59 am

    Hi Brian,

    I would call the IRS about this one. It could be that they’d let this one slide, but it might not be.

  240. Aryn on February 16th, 2010 11:05 am

    You add the whole sales tax to the deduction, but it reduces your taxable income, so you only receive back a portion of the sales tax. If it were an actual credit, it would be against the tax due, so you’d get it back dollar-for-dollar, as with the Homebuyer Credit.

  241. Aryn on February 16th, 2010 11:06 am

    Joshua – I urge you to run your taxes through a tax program. I did mine this weekend and there was a line right there on the standard form and itemized form. Your tax preparer is just plain wrong.

  242. Bob on February 16th, 2010 2:11 pm

    Has anyone from NH filed their taxes and claimed the 2009 new car tax credit? If so which fees applied

  243. Ayan on February 17th, 2010 8:31 am

    I bought a new car last year. I paid Sales Tax(5% – $1200) on the purchase price of the car. Then during the registration i paid the local excise tax(about $500). My question is, Can i add both sales tax and excise tax ($1700) to my tax deduction(standard deduction)? Or can i deduct only sales tax?

  244. Joe on February 17th, 2010 8:39 am

    Can a small business (Sub S) corporation claim the deduction assuming the passthrough income meets the income requirement. The car is owned by the Sub S corp. Thanks

  245. Aryn on February 17th, 2010 10:30 am

    Ayan – the deduction is for state and local sales and excise taxes, so yes.

    Joe – I don’t know enough about corporate taxes to answer that question.

  246. Rose on February 17th, 2010 4:48 pm

    I live in Illinois so we have the sales tax. Does anyone know whether we just put in the sales tax we paid or also include a federal excise tax? I am confused. Thanks!

  247. Aryn on February 17th, 2010 5:46 pm

    Rose – include sales and local excise taxes. Are you sure it was a federal excise tax you paid and not a local excise tax?

  248. Mark on February 18th, 2010 12:16 pm

    What about this. My wife and I BOTH bought vechicles in the same week of July 2009. They are both titled in both our names. We file a joint return. The cost of both are close to the 49,XXX limit. As long as the purchase prce for both is not claimed in excess of the limit can we claim both as deduction?

  249. Aryn on February 18th, 2010 1:09 pm

    Mark – yes, you can claim both deductions.

  250. Eddie on February 19th, 2010 2:18 am

    Is this right? I bought a car 11/09 in California (8.75% tax) and I’m getting full 49,500 deduction from car purchase. My taxable income was 16,848 for 09, but after going through turbo tax last night, it said my fed refund is only around 440 and I owed CA state tax 91. I thought I would be getting more money back since I spent over 4K on taxes for my car purchase. Any advice would help, I didn’t e-file it yet because I wasn’t sure if this was right.

  251. Aryn on February 19th, 2010 11:16 am

    Eddie, the problem here is that your taxable income is so low that you’re probably in the 10% tax bracket, which means you get back around 10% of the sales tax you paid. It’s also possible that you underwithheld payroll deductions, which will reduce your refund.

    California raised the income tax rate midway through the year, but made it retroactive to January 1, 2009. They raised the withholding in the fall to try to get some of the money early, but nearly everyone in California will end up owing this year.

    If you want to be sure, run your return through another tax program. TaxAct’s is free until you e-file.

  252. Bob on February 19th, 2010 11:31 am

    Can anybody tell me which fees apply if you live in a state without sales tax

  253. Aryn on February 19th, 2010 3:41 pm

    Bob – The tax software or IRS instructions will tell you which fees apply depending on which state you live in. It varies by state. The IRS website says “The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee.”

  254. Robert on February 20th, 2010 11:46 am

    I bought a new car on January 2,2009 because of the so called sales tax break. It had been reported many times that the tax break would cover new vehicles purchased between Nov. 12, 2008, and Dec. 31, 2009. The car dealer told us the same thing. I just found out this week that Congress did not make this bill retroactive to the dates that were previously announced. This is outright fraudulent behavior. You can go back and read many archived articles referencing the dates of Nov,08 through Dec,10 to qualify for the credit. I can see why Independents are on the rise in this Country. These elected officials cannot be trusted. We can bail out the Bankers behind closed doors but can’t follow through with a lousy $400 or $500 tax break to the hardworking folks paying their inflated salaries. I’m fed up with their lies.

    February 3, 2009 | 4:09 pm

    Bad news travels fast in Washington.

    On the same day automakers reported their worst January sales in the U.S. in 27 years, the Senate voted to approve a tax break for Americans who take the incredibly bold step of walking into a showroom and — gasp! — buy a new car.

    Mikulski The amendment, brainchild of Sen. Barbara Mikulski (D-Md.), would allow buyers to claim an income tax deduction for the sales tax they pay on a vehicle purchase and for the interest on their loan. The tax break would be available to individuals making up to $125,000 a year and to couples making up to $250,000.

    The tax break apparently would be retroactive, covering new vehicles purchased between Nov. 12, 2008, and Dec. 31, 2009, according to Mikulski’s office.

    “My amendment is simple,” the senator said in a statement. “If you buy a new passenger car, minivan, or light truck by December 31st of 2009, you will get a tax deduction for your sales or excise tax and the interest on your loan.

    “A family would save about $1,500 on a $25,000 car, not counting the additional incentives from dealers.”

    http://latimesblogs.latimes.com/money_co/2009/02/buy-a-car-get-a-tax-break.html

    Here’s another article stating the specific dates:

    http://jalopnik.com/5146133/new-car-tax-credit-added-to-stimulus-package

    Obama should have at least made this retroactive to Jan,1st 2010. Let’s see how about Feb, 16th that should be crystal clear to everyone. What a joke.

  255. Aryn on February 20th, 2010 8:07 pm

    Unfortunately, Robert, Congresspeople announce their amendments to try to drum up support, but this doesn’t mean they’ll pass in their original form (if they pass at all), and announcing them isn’t fraud. It’s best not to bank on any law until it’s actually signed, no matter what your dealer tells you.

    The above-referenced amendment also included a deduction for auto loan interest, which is not in the final law. There’s no particular reason to choose November 12, 2008 as the start date either, but most laws are applicable on the date they’re signed, which was February 17, and that’s why the deduction starts that day.

    Finally, Obama did not write the bill or choose the dates. He can only sign or veto it, therefore he couldn’t have changed the date the deduction applied.

  256. billwadden on February 21st, 2010 2:22 pm

    i signed a contract for a new honda fit on 27 dec purchase price with accessories 17.500 the car promise date was jan 10 i received a call from the dealer on 20 feb this yeat that the car is in i paid a 1000.00 deposit on the car am i eligible for the sales tax deduction

  257. billwadden on February 21st, 2010 2:36 pm

    i signed a new car contract on 27dec with a deposit of 1000 the just called on 20 feb to say the car had just come in am i still eligible for the sales tax deduction

  258. Eddie on February 22nd, 2010 1:39 am

    Hey Aryn, thanks for your input. Do you know if I can withhold the sales tax for next year’s return or is it only eligible for 2009 tax return? If that doesn’t work, if I add my dad’s name under the car purchase, can he put it on his deduction instead since he will be able to get more of a deduction than me. I just feel this special “deduction” doesn’t really help me at all since my income was so low.

    Thanks

  259. Aryn on February 22nd, 2010 10:33 am

    Eddie – it’s for 2009 purchases only and can only be deducted on the 2009 return. I doubt that you would be able to amend the purchase agreement or title to include your dad this year and have him qualify for last year.

    Bill – it’s unclear. You didn’t actually complete the purchase until 2010, so unless you have a bill of sale in 2009, I don’t think you qualify.

  260. KAB on February 22nd, 2010 1:21 pm

    Hi there – I understand the special deduction only applies to owners who bought cars between Feb. 17 – Dec 2009.

    Unfortunately, I am one of those victims who bought a new car on January 24, 2009, thinking I could get the deduction. Boy, was I mistaken.

    Anyway, because this is my first car – is there a standard “new vehicle owner” form I am supposed to fill out when I file my 2009 taxes?

  261. Aryn on February 22nd, 2010 5:28 pm

    KAB – nope, no “new vehicle owner” form to fill out with your taxes. There will be some car purchases questions if you use the software. They relate to the sales tax deduction you don’t qualify for, hybrid purchases, and business use of your vehicle. If none of these apply to you, then there are no forms.

  262. Robert on February 27th, 2010 10:16 am

    Thank You for the reply Aryn. I knew that Obama did not write the bill but didn’t he have the power to make it retroactive to a prior date such as January,1st. I’m sure a lot of tax preparers would have appreciated that as would I. Thanks again, Rob

  263. Carol golombeski on February 28th, 2010 2:25 pm

    Come on guys..you are missing the point here. Our automakers set the sales price on the cars, and the government is giving us a deduction so we can recoup some of the up front cost on the tax. In this economy, I will take what ever I can get! Do you blame the government (Republican or Democrat) for all your bad breaks in life? I will take my deduction and buy groceries!

  264. Aryn on March 1st, 2010 1:26 pm

    Robert – actually the president can’t change any part of any bill that reaches his desk. Not one letter. He can only sign it or veto it entirely.

  265. Tom on March 2nd, 2010 9:11 pm

    I am doing my daughter’s taxes and am trying to figure out what taxes are applicable to the new car she bought last year in Colorado. There is a 2.9% state tax which I believe is yes; there is a 0.5% county/use tax which I believe is yes; there is a city tax of 2.2% which I believe is yes; there is a 0.4% district tax which I believe is yes. Then, there is an ownership tax which is like a personal property tax paid each year. Do you know if this ownership tax would be included in the credit? It is based on the value of the car.

  266. Aryn on March 3rd, 2010 11:22 am

    Tom, I believe the ownership tax would be claimed under the property tax deduction for people who itemize if you pay it every year. You wouldn’t include that in the new card deduction (I think.) I agree that the other taxes are included. This might be one to call the IRS about.

  267. Patti on March 4th, 2010 8:22 pm

    I heard they extended the deduction to cars purchased through Jan 31, 2010. Can you deduct this on your 2009 return or would you have to wait until your 2010 return.

  268. Aryn on March 5th, 2010 11:53 am

    Patti, the deduction was not extended. All purchases must be complete by 12/31/09 and claimed on the 2009 return.

  269. DanyT on March 9th, 2010 12:30 am

    I bought a Ford Explorer Sport Trac in August 2009. I want to know if I can get a car credit for it and what form do I use. I have done my taxes for the last couple of year and have always used the 1040A. Do I need to use another form and attach it to the 1040 a form?

  270. McEsquire on March 9th, 2010 7:55 am

    DanyT, if the Explorer was new when purchased then yes you may take the deduction dicussed throughout this website. Additionally, you may continue to use Form 1040A, but you must attach a Schedule L. You need to check box 24b on Form 1040A, and add the deduction computed on Schedule L to line 24a. So line 24a of your Form 1040A will include the sum of your standard deduction(s) AND sales tax incurred on the new vehicle. Hope this helps.

  271. DanyT on March 9th, 2010 9:45 pm

    Thank you McEsquire for the information. I appreciate the help and yes it would help me a lot.

  272. LesK on March 16th, 2010 12:42 pm

    So I purchased my car on 2/15/09 but took delivery, plates, etc after 2/17/09. Does tax credit apply? What exactly is meant by purchase date?

  273. Aryn on March 16th, 2010 6:36 pm

    This is the tough part. You purchased the car before 2/17, but you paid the tax after 2/17. Since that was a holiday weekend, hopefully the sale became final after the start date. You might have to call the IRS about this one.

  274. OpinionEditorial — Blog — 100 Accomplishments of President Barack Obama on March 22nd, 2010 5:10 am

    [...] 65. Provided new car tax credit: http://www.soundmoneymatters.com/new-car-tax-credit [...]

  275. Claude on March 30th, 2010 7:02 pm

    Thanks for your insight.
    I’m a 4th year medical student, who lives of student loan. i but a brand new car in march of 2009, in part because of the tax credit. I have no income (other than the student loan). I ve used different software for my 2009 tax return, but none of them actually showed a refund of any sort. Do I have to have an income to get the new car tax credit? Your help will be greatly appreciated.

  276. Marilyn on April 11th, 2010 2:44 pm

    My son and his wife are separated, not legally. She filed her taxes and took the credit for the new car he bought in December 2009. He is primary on the car she is secondary. She took the car. Who should have taken the credit on their taxes? She got a refund, and he is having to pay. If he had gotten the credit he would not owe.

  277. Jeff on April 12th, 2010 9:26 am

    Question on a Lease Buyout, leased the car in 2007, purchased via lease buyout August 2009 when my lease was up, paid taxes on the buyout, does this count? Reason is on the IRS website: 1. Does Used car qualify? No, in order to take the deduction, you must be the first owner (I am) 2. Does leasing qualify? No, lease is not a purchase for purpose of this deduction (so if I leased in 2007, that wasn’t a purchase, so that means I purchased it in 2009 and it does count correct?) 3. What about those 2008 models sitting on the lot? Yes, you can take the deduction as long as you are the vehicle’s first owner (Again, I am the first owner) So I’m confused if I qualify, I’ve called IRS several times and get put on hold while researching and then get hung up on. Anyone have any insight into this? I have a feeling it doesn’t count but everything on the IRS website points to it does.

  278. Aryn on April 12th, 2010 10:07 am

    I don’t believe it counts, Jeff. From my reading, the dealership that leased you the car was the original owner of the car, not you. I’m not an expert, though!

  279. Aryn on April 12th, 2010 10:08 am

    That’s a tough one, Marilyn. Since they’re married and owned the car jointly, it could go either way.

  280. darren on April 13th, 2010 6:08 pm

    This is what i got off of TurboTax, but need someone to clarify for me:

    “What is the sales tax deduction? If you purchased a new vehicle after 02/17/09 then you may be able to claim the new car sales tax deduction instead of Sales Tax deduction, but not both. You have the option of claiming either general state and local sales taxes or state and local income taxes as an itemized deduction on Schedule A.

    If you choose to claim the deduction for sales tax, you can also claim the state and local sales tax amounts you paid for big-ticket items such as:
    motor vehicles, boats, aircraft, home materials, etc. ”

    So it sounds like i can take the standard sales tax deduction and also claim state/local sales tax from my new vehicle. Doesn’t that sound like double dipping? Also when they said you can’t do both sales tax deduction and new car sales tax deduction, didn’t that contradict their 2nd paragraph? Btw, what is the standard sales tax deduction in dollar amounts? Thanks

  281. darren on April 13th, 2010 6:13 pm

    I won’t itemize, so i will take the local sales tax for my vehicle. So i get to add this to the standard sales tax deduction?

  282. Aryn on April 14th, 2010 9:38 am

    Here’s how I read it: If you itemize, you can choose between deducting state income tax or state sales tax. If you choose the latter, you can deduct the car sales tax as part of your overall state sales tax deduction, which would also include sales tax for other big ticket items. You can’t take the state sales tax deduction and then add the new car sales tax a second time. If you itemize and take the state income tax deduction, then I believe the new car deduction would be in addition to that as a separate line item.

    I don’t know the standard sales tax deduction because it would vary by state and in California, it usually makes more sense to deduct income taxes. Check the directions for advice on determining your state sales tax deduction.

    If you don’t itemize, then you don’t take a sales tax deduction or state income tax deduction. For this year only, there is a separate provision for the new car sales tax deduction for non-itemizers. The tax instructions provide a worksheet to tell you how to add it to your standard deduction.

  283. kelsey on May 8th, 2010 4:05 pm

    i made under 10,000 in 2009. i did buy a car but do i stil get the tax back?

  284. Aryn on May 10th, 2010 10:30 am

    You probably made too little to owe any tax, so there’s nothing to deduct it from.

  285. gene danielson on March 3rd, 2011 9:39 pm

    I live in Wisconsin and bought a new 2010 Harley. At the time the sales associate said there was a 5% tax rebate but now when my taxes are due even my accounted knows nothing about this. The f&i manager said it’ part of an extended new vehicle incentive plan. Can you help?

  286. Aryn on March 4th, 2011 9:48 am

    There is no Federal new car tax rebate for 2010. It was for 2009 only. If there was a rebate for Wisconsin state taxes, I’m unaware of it, but it seems unlikely. It seems a lot of car salesmen are confused about car tax rebates, so never rely on them for tax advice.

  287. washington state stimules for new car on May 19th, 2011 7:04 pm

    [...] 2009 New Car Tax Credit Mar 3, 2009 … The new car tax credit was included on the 2009 stimulus package, and it's causing a lot of … [...]

  288. Irs Tax Booklet « « Karen Speaks Karen Speaks on September 22nd, 2011 2:09 am

    [...] Taxes Free Online in California 2010 – IRS Federal and State Tax Filing of 1040 or 1040A Early2009 New Car Tax Credit var ajax = new Array(); function TrackClick(link,title) { var index = ajax.length; ajax[index] = [...]

  289. Gilbert on May 27th, 2014 8:51 am

    Great article! This is the type of information that are supposed to be shared
    across the internet. Shame on the seek engines for not positioning this put up higher!
    Come on over and talk over with my web site . Thanks =)

  290. click here on June 19th, 2014 9:01 pm

    It’s not my first time to pay a visit this web page, i am visiting this website dailly and obtain nice facts from here everyday.

    Look into my web blog: click here

  291. what is day trading on July 3rd, 2014 12:52 pm

    Hi! I know this is kinda off topic however I’d figured I’d ask.
    Would you be interested in exchanging links or maybe guest authoring a blog post
    or vice-versa? My website covers a lot of the same
    topics as yours and I feel we could greatly benefit from each other.
    If you might be interested feel free to shoot me
    an e-mail. I look forward to hearing from you!
    Superb blog by the way!

  292. Johnk5 on July 23rd, 2014 4:52 pm

    I think you have noted some very interesting points , appreciate it for the post. ecbefbeefccb

  293. Alta on August 29th, 2014 6:00 am

    Women are often looking at 10 or 20 years of bad credit working.

    This is because the value proposition. Consumers with a healthy
    credit history will be able to help you balance the unexpected with your retirement plan? 0 feed This entry was posted on Saturday, October 15th from 9
    am until 5 pm. Advisers have been working with a stock broker may be a lost art and you’re
    possibly correct.

    Feel free to surf to my homepage … money baby lyrics – Alta,

  294. Mavis Bambach on April 8th, 2015 4:07 am
  295. forexprofitway.com on May 16th, 2015 2:39 am

    Forex Profit Way
    Forex Profit Way | Free Download free indicators , trading systems , Experts , ebooks and More
    http://forexprofitway.com

  296. szybka chwilówka on June 29th, 2015 4:03 pm

    What’s up, yes this article is actually good and I have learned
    lot of things from it concerning blogging. thanks.

  297. Ship My Corvette on August 27th, 2015 10:20 am

    In this situation, you may need to look to the company that has probably the most reasonable fees.
    Is the entire cost as it can be, or will there be additional charges.
    It’s crucial that when somebody realized the requirement
    to send his car, he or she must start gaining car shipping quotes
    as soon as they can.

  298. Christoper Mccalpin on January 6th, 2016 2:56 pm

    Want 2K Followers on Facebook for free? Look here: http://addmf.cc/?QGP0U1Q

  299. Walker Banfield on February 26th, 2016 8:51 pm

    What’s up, yup this article is actually pleasant and I have learned lot of things from it concerning blogging.
    thanks.

  300. http://xxx.com on June 10th, 2016 12:49 pm

    I get pleasure from, lead to I found exactly what
    I used to be having a look for. You have ended my 4 day lengthy hunt!
    God Bless you man. Have a nice day. Bye

  301. https://apartmentsforrentparisfranceshortterm.xyz on August 27th, 2016 5:21 am

    Mirek Klabal likes to have big friends and family gatherings at his house in Greenwich.
    Phoenix home remodeling contractors probably see into a person’s private life more than just
    about any other professional. They take the responsibility of packing, loading, transporting, unloading, and rearranging your
    belongings upon your request thus relieving you of all stresses and hassles on the day of the
    move.

  302. Lacoste Straightset Chukka 316 1 Black Women's Shoes on September 20th, 2016 10:09 am

    After I initially left a comment I appear to have clicked the -Notify me when new comments
    are added- checkbox and now every time a comment is added I receive 4 emails with
    the exact same comment. There has to be a means you can remove me from that service?
    Thank you!

  303. http://www.testtest.cm on March 5th, 2017 2:58 am

    test

  304. Tax 2009 on June 7th, 2017 10:47 am

    [...] 2009 New Car Tax Credit [...]

Leave a Reply




Current Accounts



My blog is worth $16,371.66.
How much is your blog worth?


Finance Blogs - BlogCatalog Blog Directory