The stimulus bill was signed into law yesterday and among the late additions is an incentive which allows motorcycle buyers to deduct the sales and excise taxes on their 2009 tax return. How much a buyer benefits will depend on the taxes paid and their personal tax situation, it’s not going to be an enormous incentive under any conditions.
Motorcycle dealers counting on a big boost will not find it here and would be far better served by concentrating on building their business and delivering excellent customer service.
Quick summary: (disclaimer: I believe this is correct but I am not fluent in bureaucratspeak and I may have translated this obscure language incorrectly)
— The deduction is available to non-itemizers.
— The taxes deducted only apply up to the portion of a vehicle’s purchase price of $49,500.
— There is an income limitation of $125K for single taxpayers or $250K for couples.
Specific text from the stimulus bill:
Digging through the actual stimulus bill (yes I did, so you don’t have to!) the text that applies is below:
SEC. 1008. ADDITIONAL DEDUCTION FOR STATE SALES TAX AND EXCISE TAX ON THE PURCHASE OF CERTAIN MOTOR VEHICLES.
(a) IN GENERAL.—Subsection (a) of section 164 is amended by inserting after paragraph (5) the following new paragraph:
‘‘(6) Qualified motor vehicle taxes.’’.
(b) QUALIFIED MOTOR VEHICLE TAXES.—Subsection (b) of section 164 is amended by adding at the end the following new paragraph:
‘‘(6) QUALIFIED MOTOR VEHICLE TAXES.—
‘‘(A) IN GENERAL.—For purposes of this section, the term ‘qualified motor vehicle taxes’ means any State or local sales or excise tax imposed on the purchase of a qualified motor vehicle.
‘‘(B) LIMITATION BASED ON VEHICLE PRICE.—
The amount of any State or local sales or excise tax imposed on the purchase of a qualified motor vehicle taken into account under subparagraph (A) shall not exceed the portion of such tax attributable to so much of the purchase price as does not exceed $49,500.
‘‘(C) INCOME LIMITATION.—The amount otherwise taken into account under subparagraph (A) (after the application of subparagraph (B)) for any taxable year shall be reduced (but not below zero) by the amount which bears the same ratio to the amount which is so treated as— ‘‘(i) the excess (if any) of— ‘‘(I) the taxpayer’s modified adjusted gross income for such taxable year, over ‘‘(II) $125,000 ($250,000 in the case of a joint return), bears to For purposes of the preceding sentence, the term ‘modified adjusted gross income’ means the adjusted gross income of the taxpayer for the taxable
year (determined without regard to sections 911, 931, and 933).
‘‘(D) QUALIFIED MOTOR VEHICLE.—For purposes of this paragraph—
‘‘(i) IN GENERAL.—The term ‘qualified motor vehicle’ means—
‘‘(I) a passenger automobile or light truck which is treated as a motor vehicle for purposes of title II of the Clean Air Act, the gross vehicle weight rating of which is not more than 8,500 pounds, and the original use of which commences with the taxpayer,
‘‘(II) a motorcycle the gross vehicle weight rating of which is not more than 8,500 pounds and the original use of which commences with the taxpayer, and
‘‘(III) a motor home the original use of which commences with the taxpayer.
‘‘(ii) OTHER TERMS.—The terms ‘motorcycle’ and ‘motor home’ have the meanings given such terms under section 571.3 of title 49, Code of Federal Regulations (as in effect on the date of the enactment of this paragraph).
(c) DEDUCTION ALLOWED TO NONITEMIZERS.—
(1) IN GENERAL.—Paragraph (1) of section 63(c) is amended by striking ‘‘and’’ at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ‘‘, and’’, and by adding at the end the following new subparagraph: ‘‘(E) the motor vehicle sales tax deduction.’’. (2) DEFINITION.—Section 63(c) is amended by
adding at the end the following new paragraph: ‘‘(9) MOTOR VEHICLE SALES TAX DEDUCTION.— For purposes of paragraph (1), the term ‘motor vehicle sales tax deduction’ means the amount allowable as a deduction under section 164(a)(6). Such term shall not include any amount taken into account under section 62(a).’’.
(e) EFFECTIVE DATE.—The amendments made by this section shall apply to purchases on or after the date of the enactment of this Act in taxable years ending after such date.
Jeff says
Where are these 8500 lbs. motorcycles at?
Richard Gozinya says
Perhaps this is what they were thinking about?
http://www.youtube.com/watch?v=aSZRexqys30
todd says
It’s ironic that this “stimulus” program is aimed at the portion of the population that is in a stable enough position at the moment to afford the purchase of a (up to) $49,500 vehicle. This does nothing to help people in need. It also in another means for the government to subsidize the automotive industry.
-todd
The Phantom says
The 8500lbs limit is to ensure that the top of the range HD’s scrape in under the limit… who says protectionism is dead.
Tin Man 2 says
Phantom, If you look at any large Tour Bike comparo you may be surprised to see that the Harley is the “lightest?” I dont ride a Winabago, but your misconceptions are out of date. By the way Im going to rush out and buy that Suzuki Dirt Bike Ive wanted, Im sure to stimulate the job market in Japan.
fat tony says
I’m going to rush out and buy that American dirt bike I’ve wanted.
Azzy says
Todd – maybe that is because those poeple are actually paying taxes, unlike so many that already get “earned” credits for mearly breathing and making little money.
mstrmac says
$8000 cycle @ %6 sales tax = $480 tax deduction. With adjusted gross income of $30000 you will only get a $60 return.
TOM BROWN says
O.K. HERE IT IS TAX THE SHI_ OUT OF ALL IMPORTS UNTIL THEY DECIDE TO MANUFACTURE ON OUR SHORES…..BRINGING PARITY TO ALL MARKETED GOODS IN THE U.S……….STOPS FOREIGN “DUMPING” (FLOODING THE MARKET WITH LOW COST GOODS) TO RUIN OUR ECONOMY…IT WILL ALSO PUT OUR DITIZENS BACK TO WORK…..PROTECTIONISM IS WHAT ALL THE WORLD IS ABOUT IN AN OTHERWISE CAPITALISTIC WORLD ……WAKE UP AND REALIZE THAT ANY TIME YOU BUY A CHEAP FOREIGN MADE PRODUCT (OR EVEN AN EXPENSIVE ONE) YOU ARE PAYING SOME FOREIGNERS WAGES AND HIS COMPANIES PROFIT MARGIN AND TAKEN THAT MONEY OUT OF THE AMERICAN ECONOMY………..!!!WAKE UP!!
Chris C says
I have a question on when is the exact date this bill enacted for the year 2009 tax.
Does the sales tax return apply to purchases made from Feb 18, 2009 or Nov 12, 2008?
yoyoma says
crap! I bought my bike sep ’08 which wont qualify. I sware I miss out on this kind of stuff so often it makes me want to break something.