Sales and Excise Tax Deduction on your 2009 tax return

The IRS wants you to know:

1. State/local sales and excise taxes paid on up to $49,500 of purchase price of each qualifying vehicle are deductible.

2. Qualified motor vehicles include new cars, light trucks, motor homes and motorcycles.

3. To qualify, the new car, light truck and motorcycle must weigh less than 8,501 pounds. Motor homes are not subject to the weight limit.

4. Purchases must occur after between Feb. 17, 2009 and December 31, 2009 inclusive.

5. Taxpayers who buy new motor vehicles in states with no sales tax (AK, DE, HI, MT, NH, OR), may be entitled to deduct other fees or taxes assessed on the purchase. Fees or taxes that qualify must be based on the vehicles’ sales price or as a per unit fee.

6. Taxpayers may claim the deduction when filing 2009 returns in 2010 (not on 2008 returns).

7. The deduction can be taken whether one itemizes, or not. Taxpayers who don't itemize will add the additional amount to the standard deduction.

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