If you are going to buy a new car, the sales tax you pay will be completely deductible from your gross income. That is, if you bought the car after he signed the bill. If you bought a car yesterday, you do not get the same tax benefits. Sales tax from major purchases has only been deductible as an itemized deduction before, now auto purchase sales tax is deductible from your gross income, whether you itemize or not.

Hopefully, this will help give the car industry a little kick in the pants and get more people to buy cars.

President Obama signed “The American Recovery and Reinvestment Act of 2009” into law on February 17, 2009. The law includes a new consumer tax deduction for State and local sales and excise taxes paid to purchase a motor vehicle during 2009.

Provides consumers a new tax deduction on their 2009 Federal income taxes for “qualified motor vehicle taxes.”

Qualified motor vehicle taxes include any State or local sales or excise tax imposed on the purchase of a qualified motor vehicle.

Qualified motor vehicles include passenger automobiles or light trucks with a weight rating of not more than 8,500 pounds.

NEW vehicles only.

Deduction allowed for non-itemizers.

Limitation on Vehicle Price: limited to the tax on up to $49,500 of the purchase price of a qualified motor vehicle.

Income Limitation: Phased out for taxpayers with modified adjusted gross income between $125,000 and $135,000 ($250,000 and $260,000 in the case of a joint return).

Purchases on or after February 17, 2009, and before January 1, 2010.