It’s tax time – get last-minute car deduction tips!

Truck with cash pictureThe question often comes up around here at the DIY Garage on what you can and can’t write off in regards to your vehicle at tax time.

After doing a little digging, we found this informative piece on a deduction made possible by the The American Recovery and Reinvestment Act, back in 2009.

According to H&R Block:

The American Recovery and Reinvestment Act lets you deduct state and local sales and excise taxes you paid on the purchase of a new:

  • Car
  • Light truck
  • Motor home
  • Motorcycle

The deduction is currently available on new vehicles bought from Feb. 17, 2009, through Dec. 31, 2014. You can deduct either of these:

  • State and local sales taxes, including those paid on a new vehicle
  • State and local income taxes

You can’t deduct both.

If you deduct sales taxes, you can either:

  • Save sales receipts and deduct actual sales taxes paid
  • Use the IRS’s sales tax tables to figure the deduction. You can find the tables in the Form 1040 instructions.

The deduction is limited to the taxes and fees paid on up to $49,500 of the purchase price of an eligible vehicle. The deduction is reduced for:

  • Married filing jointly with modified adjusted gross incomes (AGI) of $250,000 to $260,000
  • Other taxpayers with modified AGI of $125,000 to $135,000

If your income is higher, you don’t qualify.

How will you spend your tax deduction?

If you’re lucky enough to get one, tell us what kind of DIY project you plan to take on in the comments below!

Speak Your Mind

*