Murray Motor Imports

U.S. Economic Stimulus Package - How it affects your New Vehicle Purchase in 2009

See Below for how you can save up to $25,000

Great news for new car buyers in 2009! The recently adopted American Recovery and Reinvestment Act offers a tax deduction to many purchasers of new vehicles on or after February 17, 2009.

Purchasers of new vehicles for the remainder of 2009 are eligible for an above-the-line deduction for state and local sales taxes or excise taxes paid on the purchase.

For example, assuming a 4% sales tax on a $40,000 new vehicle, the above-the-line deduction would equal $1,600.

What Taxes are Deductible?

    
• State Motor Vehicle Sales
   
• Local Motor Vehicle Sales
   
• Motor Vehicle Excise Taxes

The new law puts a few limits on this new deduction:

    
• Deductible sales or excise taxes cannot exceed the portion of the tax attributable to the first $49,500 of the purchase price of any one vehicle.
   
• Any deduction will be phased out to the extent the purchaser has adjusted gross income exceeding $125,000 ($250,000 for joint returns).
   
• Leased vehicles do not qualify for this deduction.
   
• New vehicles of any model year qualify when the original use commences with the taxpayer.
   
• Any new vehicle not more than 8,500 pounds gross vehicle weight.

THIS IS A GENERALIZED SUMMARY. Tax savings will depend on one's individual tax rate.

Murray Motor Imports is not a tax consultant, nor do we provide tax advice. Please consult a qualified tax advisor or accountant for more information and to make sure you meet the requirements for the Automotive Stimulus Package.

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X5 and X6 Depreciation Advantage
The Stimulus Bill also extends the 50% first-year bonus depreciation through December 31, 2009. As a result, a significant tax deduction is available when the vehicle is purchased for business use. The IRS categorizes SUVs with a gross vehicle weight in excess of 6,000 lbs differently than other luxury automobiles. As a result:

    
• Business owners that purchase an X5 or X6 may be eligible for an Immediate Tax Write-Off of up to $25,000 of the Purchase Price.
   
• Furthermore, an additional Bonus Depreciation Tax Write-Off is also available for such vehicles purchased on or before December 31, 2009.

Here's an example of how the math plays out...


That's a really substantial savings. To qualify, the X5 or X6 must be purchased (not leased) and must be used for at least 50% for business purposes. This is an opportunity for business owners to capitalize on this larger tax benefit. To ensure a business owner can take advantage, the X5 or X6 must be placed into service by December 31, 2009.