Tax Incentives For Car Buyers

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You probably thought that with “cash for clunkers” done and gone, there was no longer any incentive from the federal government to buy a new car. In reality, however, there are still a number of incentives for new car purchases on the books.

You can get tax deductions and dollar for dollar tax credits on all kinds of vehicle purchases. It is uncertain whether or not most of these tax deductions and tax credits will be extended into upcoming tax years, so if you are considering getting a new vehicle at all, it might be best to make that purchase in 2009.

You can thank the American Recovery and Reinvestment Act of 2009 for most all of these special provisions for new car purchases in the year 2009. There is a New Car Purchase Deduction available for taxpayers who buy cars in 2009. Under this new deduction, you can deduct excise taxes and local and state sales taxes on a new car purchase of up to $49,500.

There are several deductions available to taxpayers who purchase hybrid or fuel alternative vehicles in 2009. The biggest of these deductions is $4000 for folks who buy a Honda Civic GX. This car runs only on compressed natural gas. There are other deductions for other vehicles. To get the information on all the deductions and how they apply to each vehicle, visit http://www.fueleconomy.gov Please note that the tax incentives for hybrid purchase are tax credits, which means that they are a dollar for dollar reduction of your taxes.

Electric powered vehicles have the best tax incentives. You can deduct 10% of the total purchase price of an electric car from your taxes. If you are buying a new car in 2009, it might be a good idea to donate your old one. There are many charities that will accept your old car as a donation. Just get a receipt, and be sure that the charity has a non-profit status so you can claim a charitable donation against the value of your old car.

If you are able to work on your old car and wish to convert it to an electric vehicle, the federal government will help you out with a 10% tax credit against the purchase price of your conversion kit. You can also claim this credit, additionally, even if you have filed a tax credit on a hybrid purchase.

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Source by Chintamani Abhyankar
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