Since You Asked: Tax break for new cars hinges on fuel-efficiency

The tax break article that ran in the Mail Tribune is timely because we are considering a new car purchase. Can you tell me if there are restrictions on buying American brands to qualify for the break?

— Bill Q., Ashland

The deduction is worth about $218 on your 2009 federal income tax and designed to encourage sales of fuel-efficient vehicles — American or foreign.

The new vehicle deduction is for passenger automobiles, light trucks and motorcycles that are designed to function normally when the combined weight of the vehicle, passengers, and cargo is 8,500 pounds or less. Motor homes are not subject to this weight limitation.

The Internal Revenue Service defines a motorcycle as a motorized vehicle with a seat or saddle for the use of the rider and designed to travel on not more than three wheels in contact with the ground. A motor scooter, either gasoline or electric-powered, that meets the definition of a motorcycle would qualify for the special New Car Sales Tax Deduction.

There's another potential deal for car buyers. Congress last week created a "cash for clunkers" program under which you could get $3,500 or $4,500 for giving up your old vehicle to the scrap heap and buying or leasing a new vehicle that's fuel-efficient.

Vouchers worth either $3,500 or $4,500 will be available to offset the price or lease of a new vehicle between July 1 and Nov. 1. Leases must be for at least five years. To get a $3,500 voucher, you must buy a passenger automobile that gets at least 4 miles per gallon more than the car you're trading in. Also, your old auto can't get more than 18 miles per gallon and the new car must get at least 22 miles per gallon.

For a $4,500 voucher, the new passenger car must get at least 10 miles per gallon more than the trade-in.

Trade-in vehicles must be less than 25 years old. New vehicles can't cost more than $45,000.

Send questions to "Since You Asked," Mail Tribune Newsroom, P.O. Box 1108, Medford, OR 97501; by fax to 541-776-4376; or by e-mail to We're sorry, but the volume of questions received prevents us from answering all of them.

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