New Car Tax Deductions and Credits
Depending on the type of vehicle you bought and how you file your tax returns, you may qualify for certain tax deductions or credits on your new purchase. If you itemize on your return, you may be able to deduct some state and local taxes. If you bought a new car, light truck or motorcycle in 2009 and made under $125,000 AGI ($250,000 for couples), you can deduct the state and local sales tax in your 2010 return (filed in 2011). Those who live in states with no sales tax can deduct other taxes and fees.
Also, under the Alternative Fuel Motor Vehicle Credit, if you bought a new hybrid car or plug-in electric, you may qualify for tax credits up to $2,500. Be aware that the full credit is only available for a limited time. According to the IRS, "taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th hybrid passenger automobile or light truck or advance lean burn technology motor vehicle." For the next two quarters, taxpayers can claim half of the credit, and for the next two quarters after that they can claim 25% of the credit, after which there is no more available credit.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.