Tax Saving Tips

As if price slashing and 0% interest rates weren't enough to spur you on to buy a new car, the US government is now offering incentives to help you make your decision now.

One of the provisions of the recently-passed American Recovery and Reinvestment Act of 2009 is a tax deduction for the purchase of a new qualified vehicle. Keep the following thoughts in mind when searching for your new car:

1. You can deduct state and local sales taxes on up to $49,500 of the purchase of a qualified vehicle. This could mean a tax break of almost $750 if your state tax rate is 6% and you are in the 25% tax bracket.

2. Qualified vehicles not only include new cars, light trucks and motorcycles, but motor homes as well.

3. You can take advantage of this tax deduction on your 2009 tax return as long as you purchase the new vehicle before January 1, 2010.

4. Even those who do not itemize deductions can receive this benefit.