Tax Incentives to Purchase a New Car

1. New Car Purchase deduction
To stimulate the economy, announced earlier this year, the IRS a new tax deduction for taxpayers who buy a car in 2009. The new deduction allows you to deduct "state and local sales and excise taxes on up to $ 49,500 of the purchase price paid on a qualified new car, truck, RV or motorcycle." So if you pay $ 2500 in taxes when you buy a new car, then you can get these funds from your taxable income next season to deduct tax. Be sure to keep all your sales documents, so you have a proof of taxes paid. In addition, there is still no word on whether the deduction will be extended or not. So if you plan to buy a car, then you might want to do before the end of the year 2009.

2. Hybrid Tax Credits
There are numerous tax credits, which even for those of you who hope that a hybrid or alternative fuel vehicle purchase. The highest of these is a $ 4,000 credit for taxpayers, a Honda Civic GX, which runs entirely on compressed natural gas to buy. As opposed to new car sales tax, are the hybrid incentive tax credits, which means you reduce your tax dollar for dollar. To see a list of all qualifying vehicles, check out FuelEconomy.gov.

3. Electric Vehicles
Although somewhat less practical then a hybrid vehicle, electric vehicles come with the best set of tax breaks. As part of the Obama U.S. authorities and reinvestment Recovery Act of 2009, created a new credit was to encourage taxpayers to buy electric vehicles. The credit is up to 10% of the purchase price, and depending on how much is this vehicle, it could be a fairly significant tax credit. For those of you who may be reluctant, expected later in 2010, plug-in electric vehicles that they hit the market and will for a similar credit line into consideration.

4. Vehicle Donations
If you decide to buy a new car, then you should donate your old car can be. In addition, you know to support a good cause, you can also use certain tax advantages. There are several reputable charities, take still (sometimes things will not run) vehicles. Just make sure the charity you have a non-profit status with the IRS, so you can include the donation as a gift on your next tax return.

5. Conversion
If you are a mechanic, or are only practical with the car, then you might be able to take advantage of the conversion tax credits. Another part of the American Recovery and Reinvestment Act of 2009, the taxpayers get to buy a kit for her car to an electric vehicle to convert to a tax credit of 10% to $ 4,000. Moreover, according to the IRS taxpayer claiming this credit, even if they have already asked to buy a hybrid loan.

Editor Tips

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