American Recovery and Reinvestment Act of 2009 was signed into law on Feb. 17, 2009. CCH once again published a great summary for the tax provisions in the law.
CCH Tax Briefing: American Recovery And Reinvestment Act Of 2009
The most significant items for individuals are:
- Making Work Pay: For 2009 and 2010, $400 per person tax credit for AGI under $75,000; phased out to $95,000 (double everything for married filing jointly).
- One-time $250 payment to Social Security and other fixed income recipients.
- AMT patch for 2009: increase AMT exemption amount from 2008 levels by $500 per person or $1,000 per couple.
- First-time homebuyer tax credit: If you never owned a home in the last three years and your AGI is under $75,000/$150,000 (phaseout to $95,000/$170,000), and you buy a primary residence between Jan. 1 and Nov. 30, 2009, you get an $8,000 refundable tax credit, which does NOT have to be repaid if you hold the home for three years. Sorry for folks who bought in 2008.
- Tax deduction for buying a new car: If your AGI is under $125k/$250k (phaseout to $135k/$260k), and you buy a new car (not used car) under $49,500 after the law is signed until the end of 2009, you get a tax deduction for the sales tax. No deduction for car loan interest. Non-itemizers are also eligible for this deduction.
- Expanded HOPE credit for education and renamed to American Opportunity Tax Credit.
For more details, please read the CCH briefing or the full text of American Recovery and Reinvestment Act of 2009.
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Was looking for this info…thanks for posting it in a concise manner.
This is a great post, thanks. My fiancee and I live in North Carolina where they charge no sales tax on cars, but instead impose hefty govt. fees on registration and such. I had always assumed they did this to try and attract buyers from other states. This really sucks because we won’t get any benefit from the sales tax writeoff, and we’ll STILL have to pay the ridiculous fees for a new car, which I’m going to go out on a limb and say are not going to be tax deductible.
I suppose we will just stick to the used car market. Screw you NC.
They most certainly do charge sales tax on cars in NC. It exactly the same as Virginia.Registration is $30 -$33 a year.
Any tax rules on buying more than one car?
Harry Sit says
Chris – I don’t see any limitation on the number of cars you buy. The limitations are on
– income: $125k single, $250k married filing jointly; phaseout to $135k/$260k;
– price: if the car costs more than $49,500, only the first $49,500 counts;
– date of first use: must be new car, not used car;
– type: weight of car, light truck, or motorcycle cannot be more than 8,500 pounds; no weight limit for motor home;
– date of purchase: buy on or after the date the law is signed (expected today, Feb. 17, 2009), through Dec. 31, 2009.
Does this apply to new car leases as well or just new car purchases?
Harry Sit says
Tino – No it doesn’t apply to leases. Only purchases.
Phil Kaup says
Does buying a new motorcycle count?
Harry Sit says
Phil Kaup – Yes, a new motorcycle counts if it was bought within the applicable dates (2/17/2009 – 12/31/2009).