American Recovery and Reinvestment Act of 2009

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009. On February 13th, the House approved the bill by a vote of 246-183 and the Senate passed the package by a vote of 60-38.  The package includes a consumer auto incentive and this page is intended to assist you in understanding how the incentive applies to you.
What taxes are deductible?
  • State Motor Vehicle Sales Taxes
  • Local Motor Vehicle Sales Taxes
  • Motor Vehicle Excise Taxes


Do you qualify for the deduction?
  • Individual customers with modified adjusted gross income of less than $125,000/year or joint filers making less than $250,000/year in 2009 qualify.
  • Deductible as an "above the line" (for itemizers and non-itemizers) deduction on federal tax return.


Which vehicles qualify for the deduction?
  • Any new vehicle under 8,500 pounds gross vehicle weight.
  • New vehicles of any model year - when the original use commences with the taxpayer.
  • Any new vehicle sold for under $49,500.
  • Consumers may deduct sales tax on the first $49,500 of any vehicle sold for $49,500 or higher.


Effective Date
  • The deduction will apply to new vehicles purchased on or after the date of enactment (February 17, 2009) until December 31, 2009.


Please note that this is a generalized summary. Tax savings will depend on one's individual tax rate. For more specific information on eligible customers, taxes, and applicability, please consult an accountant or tax professional.