Question for Vehicle Tax deduction/credit

[Mai]

One of my clients said she was told there is some kind of tax deduction/benefit for vehicle bought in 2008. But I am not aware of any other tax benefit for vehicle other than license and sales tax deduction on schedule A. Can someone help? I am afraid if I missing something important.

Thanks for the help.

[tilt]

She's close, but no cigar. There will be an above-the-line deductions for state and local or excise taxes paid on the purchase of a vehicle in 2009. This only takes effect after the date Obama signed the legislation. The new law puts two limits on this deduction:

1) Deductible sales or excise tases cannot exceed the portion of the tax attributable to the first $49,500 of the purchase price of any one vehicle; and

2) Any deduction will be phased out for any tax year in which the purchaser has adjust gross income exceeding $125,000 ($250,000 for joint returns).

Any newly purchased vehicle, including cars, SUVs, light trucks or motorcycles, first used by the taxpayer that weighs no more than 8,500 gross pounds generally qualifies. Motor homes also qualify.

[TAXBILLY]

I believe it is effective on the date of enactment.

taxbilly