Stimulus gives break to car buyers

Published 10:04 pm Friday, February 27, 2009

Residents who have waited until the passage of President Barack Obama’s stimulus package to consider the purchase of a new automobile apparently have made the right choice considering the package includes a provision that makes sales taxes on cars deductible on their 2009 federal tax returns.

The President signed the stimulus package into law Feb. 17, putting the deductions in effect for vehicles purchased on or after that date through Dec. 31.

According to the Alabama Automobile Dealer’s Association, taxes that are deductible under the stimulus bill are state motor vehicle sales taxes and local motor vehicle sales taxes.

To qualify for the deduction buyers must have modified adjusted gross income of less than $125,000 or joint-filers must make less than $250,000 in 2009.

Any new vehicle under 8,500 pounds gross vehicle weight; new vehicles of any model year as long as the use of original use of the vehicle “commences with the taxpayer; and vehicle sold for under $49,500 can qualify for the full benefit of the stimulus plan. Sales taxes can be deducted on the first $49,500 of any vehicle sold above the $48,500 cutoff.

Sales taxes on new vehicles in Chilton County are 2.75 percent, one of the lowest in the state. The allowed deduction for a $49,500 new vehicle in 2009 would be $1,361.25 (49,500 x .0275). The deduction would decrease on vehicles that cost less than $49,500.

In addition to promoting the tax deduction on new vehicles, local car dealers are offering various new car promotions. Stokes Automotive and McKinnon Motors are offering zero-percent financing along with other manufacturing rebates on many models through Monday, March 2.

– Mike Kelley can be reached at