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And since it is what they call an "above the line" deduction, that means it is an adjustment to income, one need not have enough traditional 'itemized' deductions in order to get a benefit. While it disappears after $260K (for married couples, singles are half that), it starts to phase out at $250K (again, half that for singles).
You are limited to sales taxes (or other sales-based transfer taxes in states that have no sales tax) and excise taxes, but only as they relate to the first $49,500 of vehicle value, and the vehicle has to be new, not just new-to-you.
There are gray areas, such as if you buy a dealer demo, or if a married couple buys two cars. In any case, all it means is that the money you plunk down for local government for tax in this instance will not be double-taxed by the Federal government as well. That's a nice concept, I'd sure like to not have to pay Federal income tax on the money that is coming out of my paycheck for Social Security taxes.
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