Do holiday trips and gas prices get you thinking about a new ride? There are a few tax advantages you may want to consider under the American Recovery and Reinvestment Act of 2009 when looking at your new vehicle options:
1. Plug-in Electric Drive Vehicle. Purchasing a plug-in, 4 or more wheeled electric drive vehicle after 12/31/2009 can earn a tax credit between $2,500 and $7,500, depending on the battery capacity of the vehicle.
2. Low Speed Plug-Ins. Certain low-speed electric vehicles and two- or three-wheeled vehicles can earn a credit of 10% of the cost of the vehicle (up to $2,500) for purchases made between 2/18/2009-12/31/2011.
3. Conversion Kits. You can earn a tax credit of 10% of the conversion cost (up to $4,000) for converting a vehicle to a qualified plug-in electric drive motor vehicle between 2/18/2009-12/31/2011. A taxpayer may claim this credit even if the taxpayer claimed a hybrid vehicle credit for the same vehicle in an earlier year.
4. Lowering Alternative Minimum Tax (AMT). Starting in 2009 the Alternative Motor Vehicle Credit (including the tax credit for purchasing hybrid vehicles) can be applied against the Alternative Minimum Tax.
5. New Vehicle Sales Tax Deduction. Taxpayers who buy new vehicles in 2009 can deduct the state and local sales taxes they paid or other taxes and fees they paid in states with no sales tax.