Many new car buyers could soon be in for a treat from Uncle Sam.
Under the federal stimulus bill passed Tuesday by the U.S. Senate, the government would allow tax deductions for sales tax paid on the purchase of a new passenger car, minivan or light-duty truck in 2009.
It would make new car purchases more affordable, encourage more people to buy a car and help car dealerships hurt by the economic crisis, said Sen. Sam Brownback, R-Kan.
The initial bill also included deductions for interest paid on the auto loan.
But during negotiations Wednesday, key lawmakers and the White House struck the deduction from the proposed stimulus plan, which could clear Congress by the end of the week.
Car dealers in Lawrence had different opinions about how far-reaching the effects of the incentive would be for consumers.
“It will boost business, there’s no question about that,” said Loris Brubeck, of Jim Clark Motors Inc., 2121 W. 29th Terrace. “People like things that give them a tax credit.”
“It’s certainly better than nothing, but it’s hard to say whether this will actually motivate them,” said John Ellena, of Jack Ellena Honda, 2112 W. 29th Terrace.
The car sales tax break would apply to the first $49,500 of new cars purchased between Nov. 12, 2008, and Dec. 31, 2009, and only to individual taxpayers who make less than $125,000 a year or families who make less than $250,000 a year.
In Lawrence, qualifying taxpayers would hypothetically be able to deduct $1,825 from their federal tax returns for the sales tax paid on the purchase of a $25,000 new car in 2009.