If you have pent-up demand to buy a new ride, now might be a good time. Folks who buy new (not used) vehicles this year can qualify for some nice federal income tax breaks that won t last forever. Plus there are bound to be some great deals out there -- especially now that both General Motors (GM) and Chrysler have gone into bankruptcy and their dealership networks are looking to unload cars sitting on their lots. Here s what you need to know about the tax-saving angles right now (not including any cash for clunkers program that may come along later this year).

Stimulus legislation passed earlier this year created a new federal income tax deduction for state and local sales and excise taxes paid on new (not used) vehicles that are purchased (not leased) between Feb. 17 and the end of this year. The new write-off is limited to the amount of taxes on the first $49,500 of the purchase price. You can claim the break whether you itemize or not, and it s allowed even if you owe the dreaded alternative minimum tax (AMT). An IRS spokesperson recently confirmed that you can claim the deduction on as many vehicles as you care to buy within the designated timeframe.

Qualifying Vehicles

The new write-off is available for any of the following:

* New (not used) passenger autos and light trucks with gross vehicle weight ratings of 8,500 pounds or less (this definition includes almost all SUVs and conventional pickups).

* New (not used) motorcycles with gross vehicle weight ratings of 8,500 pounds or less (I can t conceive of a motorcycle that wouldn t qualify).

* As a bonus, new (not used) motor homes.

Beware of High-Income Phase-Out Rule

Unfortunately, the new vehicle sales tax deduction is phased-out (reduced or completely eliminated) if your adjusted gross income (AGI) is too high. The phase-out range for unmarried individuals and married individuals who file separately is between AGI of $125,000 and $135,000. The range for married joint filers is between $250,000 and $260,000.

Hybrid Vehicle Credits

Federal income tax credits are allowed for buying (not leasing) new (not used) hybrids. Remember that a buck worth of credit is much more valuable than a buck worth of deduction -- because a credit reduces your federal income tax bill dollar for dollar. In fact, the hybrid vehicle credit can be used to offset your 2009 federal income tax bill even if you owe the dreaded AMT. And high income won t disqualify you. Even billionaires can take advantage.

However, the credits are phased out once a manufacturer has sold over 60,000 hybrids in the U.S. That s why credits for Toyota (TM) and Lexus hybrids disappeared after 2007 and credits for Honda (HMC) hybrids vanished after 2008. Credits for Ford (F) and Mercury hybrids are being phased out right now. For this reason, you ll get a bigger credit for buying a Ford or Mercury hybrid before Oct. 1. (After March 31 of next year, credits for Ford and Mercury hybrids will vanish completely.) So far, full credits are still allowed for hybrids put out by other manufacturers.

Here s the current list of IRS-approved models and credits. Many more 2010 models will be on board as soon as they are certified by the IRS.

2010 HYBRID MODELS
Ford and Mercury Hybrids (Credits Depend on Purchase Date)

2009 HYBRID MODELS
Ford and Mercury Hybrids (Credits Depend on Purchase Date)

Chrysler and Dodge Hybrids (Full Credits Allowed So Far)
Chrysler Aspen = $2,200
Dodge Durango = 2,200

GM Hybrids (Full Credits Allowed So Far)
Cadillac Escalade 2WD = $2,200
Cadillac Escalade AWD = 1,800
Chevy Malibu = 1,550
Chevy Silverado 2WD and 4WD = 2,200
Chevy Tahoe 2WD and 4WD = 2,200
GMC Yukon 2WD and 4WD = 2,200
GMC Sierra 2WD and 4WD = 2,200
Saturn Aura = 1,550
Saturn Vue = 1,550

Mazda Hybrids (Full Credits Allowed So Far)
Mazda Tribute 2WD = $3,000
Mazda Tribute 4WD = 1,950

Nissan Hybrid (Full Credit Allowed So Far)
Nissan Altima = $2,350

Lean-Burn Diesel Vehicle Credits

Federal income tax credits are also granted for buying (not leasing) new (not used) lean-burn diesels. These credits will offset your 2009 federal income tax bill even if you owe the AMT and regardless of how high your income might be. Unlike hybrids, lean-burn diesels achieve superior fuel efficiency without sacrificing much performance. In fact, they haul you-know-what. And they don t have expensive and environmentally hazardous battery packs that eventually need to be replaced and disposed of. If this sounds to you like a vastly superior technology, you re right! Lean-burn credits are subject to the same phase-out rule as hybrid credits. So they will be reduced and eventually disallowed after a manufacturer has sold 60,000 units. At this point, however, the phase-out rule is no cause for concern. Here s the current list of IRS-approved vehicles and credits (2010 models will show up as soon as the IRS certifies them).

2009 DIESEL MODELS

Audi Diesel
Q7 3.0L TDI (midsize SUV) = $1,150

BMW Diesels
335d Sedan = $900
X5xDrive35d (midsize SUV) = 1,800

Mercedes Benz Diesels
R 320 BlueTEC (crossover) = $1,550
GL 320 BlueTEC (large SUV) = 1,800
ML 320 BlueTEC (midsize SUV) = 900

Volkswagen Diesels
Jetta 2.0L TDI Sedan = $1,300
Jetta 2.0L TDI SportWagen = 1,300
Touareg 3.0L TDI (midsize SUV) = 1,150