Last week, we reported that the Senate’s version of the $800 billion economic stimulus package included an amendment that would make the interest on any new car loan tax deductible. When final negotiations took place to gain the three republican votes necessary for the bill to pass, the tax deduction was removed. A provision allowing new car buyers to write off their sales tax stayed in the bill.
Cutting the amendment that would have made the interest on new car loans tax deductible reduced the price of the stimulus package by $6 billion. To put this in perspective, the stimulus package includes $8 billion for the railway system that, according to MSNBC, will mostly go toward paying for a high-speed train to run from Los Angeles to Las Vegas.
So new car buyers won’t have as much help from the government as we had hoped, but deducting the sales tax from your new car could save you more than $1,000, depending on your state’s sales tax.