Stimulus Package Auto Tax Deduction Expires 12/31/2009

Update! The automotive sales tax deduction expires at the end of December! Read below for details!

So here is the official release of the Economic Stimulus Package regarding auto sales tax deductions. I hope you find all of the information you need and yes this does apply to new Toyotas!

February 17, 2009
Today, the President is expected to sign the American Recovery and Reinvestment Act of 2009. Upon becoming law, car buyers will be permitted to deduct sales/excise tax from their yearly income tax bill for vehicles purchased before the end of this year.
What Taxes are Deductible? 1

State Motor Vehicle Sales

Local Motor Vehicle Sales

Motor Vehicle Excise Taxes
What Customers Qualify for the Deduction?

Individual customers with modified adjusted gross income of less than $125,000 or joint-filers making less than $250,000 a year in 2009 would qualify for the deduction.

Deductible as an “above the line” (for itemizers and non-itemizers) deduction on federal tax return.
Effective Date

New vehicle purchases shall apply to purchases on or after the date of enactment
(expected February 16, 2009) until Dec. 31st, 2009.
What New Vehicles Qualify for the Deduction?

Any new vehicle under 8,500 pounds gross vehicle weight.

New vehicles of any model year – when the original use commences with the taxpayer.

Any vehicle sold for under $49,500 qualifies for the full deduction. Consumers may deduct sales taxes on the first $49,500 of any vehicle sold above this price.
THIS IS A GENERALIZED SUMMARY. For more specific information on eligible customers, taxes and applicability, dealers are encouraged to consult with a qualified tax attorney or professional.
1 “For purposes of this section, the term ‘qualified motor vehicle taxes’ means any state or local sales or excise tax imposed on the purchase of a qualified motor vehicle.”- (Text of H.R. 1)
If you no longer wish to receive fax communications from NADA and its subsidiaries, please send your opt-out request by email to, by fax at (703) 442-3179, or by telephone at (800) 248-6232 x 2878 and provide your name and fax number, along with a statement that you do not wish to receive faxes from NADA and its subsidiaries. We must process your request within 30 days.

5 Responses

  1. Ella,

    The President did sign the bill back in February of this year.

  2. I am looking to trade in a 96 Rav stick shift for a hybrid. Would that qualify under the new clunker stimulus? IF so, what would be allowed?

    I am wondering what is new in your hybrid category. Will there be a Rav 4 hybrid?
    What is the cost for a hybrid Highlander?

    • Doranne, the Rav-4 is in the SUV class and since it gets better than 18mpg average, unfortunately it gets better fuel economy that what the limits are. On the other hand, there is a goog market for that car and we would like to see it if you have an opportunity.

      On the Hybrid scene, we just got the new Prius and we also have plenty of Hybrid Highlanders as well. Right now, we do not have any information on whether we will have a Hybrid RAV or not and we have not been notified otherwise.

      The Hybrid Highlander runs from the high 30’s to the high 40’s depending on how you would like it equipped. Please feel free to e-mail me at or call me at 720-864-2467.

  3. Nice topic, I have been looking around for a good read like this for a while and google finally led me to one. Will definately be subscribing to your site.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s