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Hey everyone, I'm looking to buy a 09 Cystal Black Si 4-door and the internet sales guy sent me this email:

"ALRIGHT FOLKS YOU'VE HEARD IT, THE CAT IS OUT OF THE BAG!!!!

The New Stimulous Package signed by President Obama has allowed New Car buyers the opportunity to write off the sales tax on a New Honda purchase.....

If you've been thinking about owning a new Honda, plus getting a nice perk from the Government, the time is right!!!!!"

I was wondering what this was about and how it could help me in purchasing a new car? Thank you.
 

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Really, Obama specifically mentioned Honda? I am wondering if it's not another sales gimmick.

Here's the literature, have fun! It appears to be true!

Appropriations Committee - Dave Obey, Chairman

QUALIFIED MOTOR VEHICLE TAXES.—
(A) IN GENERAL.—For purposes of this section, the term ‘qualified motor vehicle taxes’
means any State or local sales or excise tax imposed on the purchase of a qualified motor vehicle.
‘‘(B) LIMITATION BASED ON VEHICLE PRICE.—The amount of any State or local sales or excise tax imposed on the purchase of a
qualified motor vehicle taken into account under subparagraph (A) shall not exceed the
portion of such tax attributable to so much of the purchase price as does not exceed $49,500.
‘‘(C) INCOME LIMITATION.—The amount otherwise taken into account under subpara graph (A) (after the application of subparagraph (B)) for any taxable year shall be reduced (but not below zero) by the amount which bears the same ratio to the amount which is so treated as—
‘‘(i) the excess (if any) of—‘‘(I) the taxpayer’s modified adjusted gross income for such taxable
3 year, over ‘‘(II) $125,000 ($250,000 in the case of a joint return), bears to ‘‘(ii) $10,000.
‘‘(D) QUALIFIED MOTOR VEHICLE.—For purposes of this paragraph— ‘‘(i) IN GENERAL.—The term ‘qualified motor vehicle’ means—
‘‘(I) a passenger automobile or light truck which is treated as a motor vehicle for purposes of title II of the Clean Air Act, the gross vehicle weight rating of which is not more than 8,500 pounds, and the original use of which commences with the taxpayer,
‘‘(II) a motorcycle the gross vehicle weight rating of which is not more than 8,500 pounds and the original use of which commences with the taxpayer, and ‘‘(III) a motor home the original use of which commences with the taxpayer.
‘‘(ii) OTHER TERMS.—The terms ‘motorcycle’ and ‘motor home’ have the meanings given such terms under section 571.3
of title 49, Code of Federal Regulations (as in effect on the date of the enactment of this paragraph)
‘‘(E) QUALIFIED MOTOR VEHICLE TAXES
NOT INCLUDED IN COST OF ACQUIRED PROPERTY.—The last sentence of subsection (a) shall not apply to any qualified motor vehicle
taxes.
‘‘(F) COORDINATION WITH GENERAL
SALES TAX.—This paragraph shall not apply in the case of a taxpayer who makes an election under paragraph (5) for the taxable year.
‘‘(G) TERMINATION.—This paragraph shall not apply to purchases after December 31, 2009.’’.
 

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of course, you've always been able to include sales tax of gross purchases as part of your deductions if you itemize rather than take the standard deduction. What this does is allow you to take the sales tax as a deduction in addition to the standard deduction.

and it's not the large of a savings for most people on their income taxes.
 

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^^^ In order for you to take advantage of sales tax in itemizing your deduction, you would have to give up personal taxes paid. In two years working in Tax, I only saw one return like that.

This might actually be a credit, which means you would get back as much sales tax as you paid.
 

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So does that mean it'll even you out in what you paid in car taxes? Does it even benefit the buyer much?
Well if they make it a 100% credit, then yea, you would get back every dollar you paid in sales tax. If they make it part of itemized deduction, or adjustment to income, then not so much, but at least something. Whatever it is, you will have to be aware that the benefits for this will be available when you file your 09 return, in 2010. However, be prepared of hearing about this from annoying car commercials throughout the whole 09.
 
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