Approximately $2.3 billion is earmarked for encouraging new vehicle purchases, which could add up to some major cost savings for consumers.
On their 2009 taxes, people who purchase a new domestic or foreign car by the end of the year will be able to deduct local and state sales tax paid on their vehicle up to a value of $49,500.
Furthermore, the tax break is considered “above the line,” which translates to a lower taxable income if you make less than $125,000 (individuals) or $250,000 (couples).
“This tax credit may make a new vehicle purchase more feasible for many consumers in the near future,” commented Eric Hoffman, spokesperson for AWARE, a nonprofit education group.
He recommended that car shoppers obtain their credit report to see if there is room for improvement before seeking financing, as well as shopping around for auto loan deals among a variety of lenders.
U.S. car sales fell 37 percent in January, compared with the same month in 2008.
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