Cash for a Clunker, Deduction for a Brand New Car

If you need a new car, now is the best time to get one.  Here are the two reasons why:

1) Under the Consumer Assistance Recycle and Save Act of 2009  (commonly known as the Cash for Clunkers Act), you can trade in a less-fuel-efficient vehicle (less than 22 mpg for a passenger car, for example) for a $3,500-4,500 voucher to go towards the purchase of a more-fuel-efficient vehicle.  This program is in effect from July 1, 2009 to November 1, 2009, and as far as we know, there are no restrictions on the brands of cars you can purchase as long as the new car is more fuel efficient than the old one.  Click here for more information.

2) The IRS is allowing consumers to deduct from their 2009 federal taxes the state and local sales taxes paid on the purchase of a new vehicle.  Remember, a deduction lowers the amount of income on which you will be taxed.  Purchases, however, must be made between after February 16, 2009, and January 1, 2010 and are limited to new vehicles (not used).  The deduction also phases out at higher incomes.  Click here for more information.

If you have a less fuel efficient car and are looking to buy a new car, you have until November 1st of this year to take advantage of both incentives.  And if you don’t, the tax break alone may still make purchasing a new car this year a great deal.

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