RICHMOND, VA (WWBT) - Time is running out for new car buyers to cash-in on a rare tax incentive. This year, the government is allowing a tax write-off that could mean hundreds of dollars back in your pocket.
Canan and Jim Boomer are in the market for a new car. And today, they just learned, it could save them a lot of money on their taxes.
"I think it will make a difference whether we buy one now, or not till next year," Canan said.
As part of the stimulus program, the government is allowing people who buy a new car to deduct the sales tax when they file a 2009 return. But the deal only applies to new vehicles sold between February 17 and December 31, 2009.
"The urgency now is for the consumer to take advantage of this tax credit before Thursday," said Nick Scola, Marketing Manager at McGeorge Toyota.
The credit phases out for wealthy people, and is limited to the first $49,500 of a new car purchase. With a new car sales tax rate of 3%. That means you could write-off up to $1,485 dollars. If you buy a cheaper car, the benefit could still be north of $600.
"So it really is a stimulus effort to help get the economy moving again," said Michael Allen, Public Affairs Director of the Virginia Automobile Dealers Association.
2009 has been difficult for the auto industry. Cash-for-clunkers helped, but most dealers are seeing lower-than-expected sales numbers. They're hoping this incentive begins to bring them back up.
"If you can deduct $1,000 for the adjusted gross income, it could save you several percentage points on your income taxes," Allen said.
At McGeorge Toyota, customers were intrigued by year-end discounts and the tax incentive.
"Think it'll enhance it, and provide for a very strong year-end close for us," Scola said.
And with just two full days to go before the deadline, Canan and Jim say its one more thing, to consider carefully.
"I want to analyze everything, see if it is what I want," Jim said.
It's important to remember that the incentive is a tax write-off, not a refund. For more details, visit www.irs.gov/recovery