Treasury widens new car tax write-offs

WASHINGTON, June 11 (UPI) -- The U.S. Treasury Department Thursday said new car buyers could apply local taxes and fees to create a federal tax deduction in states that have no sales tax.

"Building on the Recovery Act, the Treasury Department is taking steps to make sure every American, in every state qualifies for a tax deduction when purchasing a new car," Deputy Secretary Neal Wolin said in a statement.

"This tax deduction not only increases support for the auto industry as it seeks to rebuild, but also puts money back into the pockets of hardworking Americans," he said.

The statement said the IRS and the Treasury agreed provisions in the economic stimulus package allows for residents of Alaska, Delaware, Hawaii, New Hampshire, Oregon and Montana to qualify for the tax deduction on fees and taxes incurred on new vehicle purchases up to $49,000, if the vehicles were bought between Feb. 16, 2009 and Jan 1, 2010.

It is also available for taxpayers who do not itemize deductions, the Treasury said.