Here's how the sales-tax deduction works (based on what I have read): ->The deduction applies to sales taxes (state AND local, I believe) on any new vehicle purchased in 2009 (Hummer or Prius or anything else - but not pre-owned). ->Cutoff is $125K for single / $250k married. (I'm not aware of a phase-out, I think it's a hard line.) ->It is not a tax credit, it is a reduction in taxable income (a deduction). ->It will be a separate line on the main 1040, so you don't have to itemize. If you do not itemize, you can take this deduction - just put in the number and your taxable income goes down by an equal amount. If you itemize and your state has no income tax, then your net taxable income won't change - you can either take the sales tax deduction on your sched A -or- on the separate line, but you can't take it in both places. If you itemize and your state has an income tax but you choose to itemize your sales taxes instead, it's the same as if your state has no income tax (see above). Last but not least (and this applies to many of us), if you itemize and your state has an income tax, and you deduct that on your sched A, you can also deduct your sales tax on a new car on the separate line on the main 1040.
So, Oregon has no sales tax only a state income tax. Does this mean that I am entitled to nothing on my Federal. I do know that on my state tax I am entitled to a $1,500.00 tax credit which is nice. alfon
Your correct. But..The Sales Tax Deduction from your income still applies if purchased ...Small but at least something....
I guess you quit reading after the first page. The tax deduction was mentioned about five or six times. Even by me a couple of times.
You are correct - nothing from the Feds (unless you lie to the IRS, but that's so easy it's like cheating - oh wait, it IS cheating...) But enjoy the $1500 credit from Oregon, in order to get that much back from the 1040 deduction, you'd have to be in the 25% bracket and buy a $75,000 car in a state with 8% sales tax.
Because most of your state tax load has always been income tax, you have long been covered on this. Those of us in states that get most of their revenue from other taxes, many of them not deductible (sales tax wasn't deductible for a significant period) are just being given some parity.
you need to fill out form (online) and mail it in with copys of purchase paperwork and they mail you a post card with some codes for the $1500.00 state oregon hybrid discount. just got mine in mail a few days ago
