SEC. 1009. ABOVE-THE-LINE DEDUCTION FOR STATE SALES TAX AND EXCISE TAX ON THE PURCHASE OF CERTAIN MOTOR VEHICLES.
(a) IN GENERAL.?Subsection (a) of section 164 of the Internal Revenue Code of 1986 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 of the Internal Revenue Code of 1986 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 (as defined in section 163(h)(5)(D)).
??(B) DOLLAR LIMITATION.?The amount taken into account under subparagraph (A) for any taxable year shall not exceed $49,500 ($24,750 in the case of a separate return by a married individual).
??(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
??(ii) $10,000.
For purposes of the preceding sentence, the term ?modified adjusted gross income? means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section
911, 931, or 933.
??(D) QUALIFIED MOTOR VEHICLE TAXES NOT INCLUDED IN COST OF ACQUIRED PROPERTY.? The last sentence of subsection (a) shall not apply to any qualified motor vehicle taxes.
??(E) COORDINATION WITH GENERAL SALES TAX.?This paragraph shall not apply in the case of a taxpayer who makes an election under paragraph (5) for the taxable year.??.
(c) CONFORMING AMENDMENTS.?Paragraph (5) of section 163(h) of the Internal Revenue Code of 1986, as added by section 1, is amended?
(1) by adding at the end the following new subparagraph:
??(E) EXCLUSION.?If the indebtedness described in subparagraph (A) includes the amounts of any State or local sales or excise taxes paid or accrued by the taxpayer in connection with the acquisition of a qualified
motor vehicle, the aggregate amount of such indebtedness taken into account under such subparagraph shall be reduced, but not below zero, by the amount of any such taxes for which a deduction is allowed under section
164(a) by reason of paragraph (6) thereof.??, and
(2) by inserting ??, after the application of subparagraph (E),?? after ??for any period?? in subparagraph (B).
(d) DEDUCTION ALLOWED ABOVE-THE-LINE.? Section 62(a) of the Internal Revenue Code of inserting after paragraph (22) the following new paragraph:
??(23) QUALIFIED MOTOR VEHICLE TAXES.? The deduction allowed under section 164 by reason of subsection (a)(6) thereof.??.
(e) EFFECTIVE DATE.?The amendments made by this section shall apply to taxable years beginning after December 31, 2008.