New tax savings for car buyers

A surge in purchases of GM cars this year won't save the job of CEO Rick Wagoner, effectively forced out today by the Obama Administration. But buying GM--or any other car--this year may save you more than in other years.

The IRS announced today that taxpayers who buy new passenger cars between Feb. 16, 2009 and Jan. 10, 2010 will be able to deduct their state and local sales and excise taxes on their 2009 returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The deduction phases out for individuals with modified adjusted gross income is between $125,000 and $135,000, and joint filers with MAGI between $250,000 and $260,000.  

You won't get to use this deduction on this year's return, but that doesn't mean there aren't lots of tax breaks you can use now.  And click here to watch a video on breaks for lower-income taxpayers who don't necessarily itemize. 

--Tobie Stanger