Tax Credit For Buying A New Car

Save Big Money with a Tax Credit for Buying a New Car

In a rare incidence, of the government actually doing something to help the average Joe, the recently passed stimulus package includes a tax credit for buying a new car. That’s right, you can actually save on your taxes if you buy a new car this year, so if you’ve been looking to buy a new car, this might be the time.

It’s actually not that surprising that the government would give you a tax credit for purchasing a new car. The government has essentially taken over the management of GM and the car manufacturing sector is one of our biggest job producers. Because of this, the government has a vested interest in getting us to keeping buying new cars.

In order to qualify for this credit for you need to have completed your purchase between February 17, 2009 and December 31, 2009. The key word here is completed; if you are still haggling on New Years’ Eve and don’t seal the deal, you won’t get the credit. Likewise, those of you who bought your car prior to February 17 are going to miss out.

The tax credit for buying a new car only applies to the first $49,500 of any car, light truck, motorcycle or mobile home purchase. This doesn’t mean that you can’t buy a more expensive car, just that the credit will only apply to the first fifty thousand dollars or so.

There are limits to how much money you can earn and still qualify for the credit, but they are pretty high, so most of us will be able to qualify. A single person earning less than $125,000 or a couple earning less than $250,000 will be able to get the maximum benefit, with benefits beginning to decrease after that. If you make more than $135,000 and $260,000 respectively, you don’t qualify for the tax credit for buying a new car.

The tax credit basically allows you to deduct the taxes you would be paying on a new car from your taxes, which could be a savings in the hundreds or thousands of dollars. There was talk of including loan interest, but this didn’t pass. Because of this, it’s probably not a good idea to buy a new car just because of this, but if you are going to buy a new car, it certainly helps lower the overall cash outlay of your taxes.

The tax credit for purchasing a new car only applies to your 2010 tax return, so you’re going to have to wait a bit for the money. The tax credit is what is called an above the line tax deduction, so you can still use the deduction even if you don’t do an itemized deduction.

The amount that the tax credit for buying a new car will benefit you will vary from state to state. People that live in high sales tax states will benefit the most, and you need to keep in mind the particular tax laws of your state. The best way to look at the money from the credit is bonus money, not the reason you buy the car.

By: Shane Smith.  If you are looking for landscape or backyard lights then check out: http://makevoltz.com