From http://www.cars.gov :

Q. Is the credit subject to being taxed as income to the consumers that participate in the program?

A. NO. The CARS Act expressly provides that the credit is not income for the consumer.

From TaxACT.com and also referenced at http://www.irs.gov :

- New Vehicle Purchase Incentive: Qualifying taxpayers can deduct the state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. The deduction per vehicle is limited to the tax on up to $49,500 of the purchase price of each qualifying vehicle and phases out for taxpayers at higher income levels.

Share the knowledge…

Guess I’ll have to do some digging myself.

Watch out, because the Cash For Clunkers payments may be taxable!

Depending on your state, you may pay sales tax, state income tax, and regardless of state you may pay Federal Income Tax!!! This was not clearly disclosed in the process from what I recall… which is Ultra-LAME!

I did send out emails about this to Governor Lynch (NH Governor) and President Obama.

-Dan

Now we wait for the next stimulus program, based on the hazardous waste that is created by replacing the battery in a hybrid vehicle. I heard through the grapevine that this might be called “Bills for Batteries” LOL

(sorry, long day…)