Brother can you spare a dime? This was a commonplace saying in the great depression. Today we have many of the same conditions which brought our great nation to its knees in the 1930's. During this period President's Hoover & Roosevelt developed government programs like the "New Deal" to help return America to its economic health.
While our current economic stimulus and bailouts are taking a vastly different approach there are some elements which may benefit you. You may be surprised to know that motorcycles are considered qualified vehicles in Section 1008 of the Economic Stimulus Package. The intent of including motorcycles as qualified vehicles was to encourage Americans to "go green". It's no surprise that motorcycles are more fuel efficient than autos so the move does make sense.
The new law guarantees that anyone who purchases a new motorcycle, light truck, new car or recreational vehicle, Feb. 17 through Jan. 1, 2010, will deduct state and local sales taxes as well as any excise tax charged in the purchase. In order for citizens to obtain the tax deduction, the bike must be less than 8,500 pounds in gross vehicle weight and cost less than $49,500. The buyer must also make less than $125,000 in gross taxable income and $250,000 for joint filers. However, the deduction is phased out for taxpayers with modified adjusted gross income between $125,00 and $135,00, and $250,00 and $260,00 in case of a joint return.
If motorcycles aren't your thing, this provision also applies to qualified cars and trucks. Heck, even folks buying motor homes get a break. Even though motor home sales have slumped, a tax provision for motor homes is included, which allows a portion of the sales or excise tax paid on the purchase of a new motor home to be deducted.
The deduction is attributable to taxes applying to the first $49,500 of the purchase price. Individuals with an adjusted gross income of up to $125,000 and joint filers with an adjusted gross income of up to $250,000 are eligible for the deduction.
So what does this mean to you? Let's assume you just bought a new Road King for $20,000. If you were not trading a vehicle you would pay sales tax on the total. If you are trading a vehicle you only pay sales tax on the "difference". So using our example, you just shelled out $20,000 and fork out an additional $1500 for sales tax (7.5%). Our friends in Chicago would pay $2000 thanks to the efficiency of Cook County. So now that you have shelled out this money what's next?
Thanks to the new Economic Stimulus Package you can deduct the amount you paid in sales tax on a new qualified vehicle from your gross income. Let's do the math to see how this impacts you. For our example let's say you made $100,000 in 2009 and your tax rate is 32%. By reducing your income by $1500 you just pocketed $480. It's not a whopping sum but as my grandpa would say, "it's better than a stick in the eye".
Times are tough for everyone so a few extra bucks is always good news in my book. I recently bought a new 2009 Street Glide and I damn sure will be deducting my sales tax..... Heck, now I can buy some more bling for my scooter.
So there is the good news. You are now one step closer to getting that new scooter. Now to make sure that you get the best deal and coverage on your motorcycle insurance you need to call me. I can customize a plan for you that protects you, your family and your new scooter. If I can help you please call me at 630-232-9811 or drop me a line at deanakey@allstate.com. Until my next edition, ride safe and often.
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