Time running out for tax break on new car

By Crystal Price - bio | email

LAKE CHARLES, LA (KPLC) - It is time once again for year end sales at local car dealerships throughout the lake area.

"The week between Christmas and New Year's is when business picks up a lot," says Corey Tarver, Sales Manager for Lake Charles Toyota.

But this year, car buyers are getting more than their typical marked down end of the year prices.

If you buy a new car before December 31st, there is a special federal tax deduction on a brand new car.

This incentive stems from the American Recovery Reinvestment Act that started back in February.

"It is just a tax deduction where the sales tax you paid will be written as a tax deduction so that it decreases on your taxable income," says Tarver.

While this tax break expires in less than two weeks, dealerships want to remind consumers of the advantage before it is too late.

"The big thing is it is free money," says Tarver. "If you wait a couple more days, then it's just money out of your own pocket."

The deduction applies to taxes paid on up to $49,500 of the purchase price for qualified new cars, light trucks, motorcycles, and motor homes.

John Owens of Jackson Hewitt Tax Service says it is a great opportunity for folks to save money.

"The great thing it's going to do for them is its going to reduce the amount of taxes that they're actually going to have to pay on their tax return," says Owens.

But it's not a credit like some may think.

"It's not a dollar for a dollar difference in the amount of tax owed," says Owens. "It is a deduction that reduces the amount of your taxable income down. This way you don't owe a bunch of taxes next year."

If you still need to take advantage of the tax break, you have until the last day of the year.

For more information click on "New Car Sales Tax Deduction."

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