Passage of the 2009 stimulus package by Congress and signed into law by President Obama contains a few benefits for those who are in the market to buy a new vehicle before the end of 2009 or for those who take public transportation to their places of employment.
Sales or excise tax deductions. If you are in the market for a new vehicle, you will be able to deduct the sales or excise tax on your purchase. That is, if you make the purchase before December 31, 2009. There are some limitations, however.
Above-the-line deduction. First of all, on the positive side, this tax break was set up as an above-the-line deduction which means that you do not have to itemize your deductions in order to take advantage of this break. Some still do not use the ‘long form’ for itemizing, and so this deduction does not leave me out of the equation.
Limitations. The main limitation calls for the deduction to be held to the sales taxes on the vehicle amount of up to $49,500. The limit of adjusted gross income eligibility is capped at $125,000 for single taxpayers and $250,000 for couples.
State sales tax rate determines the amount. Like the vehicle advertisements all state: your actual mileage may vary. Under this plan, your state sales tax percentage determines the amount of the deduction. For example, if the purchase price on a new vehicle is $20,000 and your state sales tax is 6%, then your sales tax and deduction amount would be $1,200.
Effective now until December 31, 2009. The final limitation of this tax benefit is that it expires on December 31, 2009. The idea is to generate sales of new vehicles during this calendar year to help spur the economy. While not perfect, the logic is understandable and therefore appreciated.
One would surmise that this could have been made even better by extending the benefit to the sale of used vehicles also, but that would not have benefited the auto manufacturers directly. This part of the stimulus package is aimed at jump-starting this sector of the economy which would have a ripple effect on the supporting industries.
Tax break for taking the train/bus. Those who utilize public transportation to and from their places of employment will be able to hold out $230 per month in pre-tax dollars to cover those expenses. This is an increase of $120 over the existing tax benefit. Employer subsidized public transportation costs allow the employees to receive up to $230 a month without being taxed.
These are all very positive steps to help spark the economy because it places money back into the taxpayers’ pockets. And, any time that has taken place in the past it has produced the desired results.
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1 users resposed " Vehicle Tax Benefits from the 2009 Stimulus Package "
February 25 2009
I must say this is a great article i enjoyed reading it keep the good work 
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