Vehicles eligible for the motorcycle tax deduction added to the American Recovery and Reinvestment Act are likely to include on-road and dual-sport motorcycles, as well as motorscooters and mopeds, according to the American Motorcyclist Association (AMA). The tax deduction -- first reported by the AMA on Feb. 14 -- was added at the eleventh hour to the landmark $787 billion stimulus package that President Barack Obama signed into law on Feb. 17.

"While we are awaiting final language from the Treasury Department, we believe that many motorcycles and scooters will qualify," said Ed Moreland, AMA vice president for government relations. "We have AMA members to thank, because they responded to our appeal to contact their legislators to make sure that motorcycles were part of this inclusive and equitable solution." Moreland added that the efforts of Harley-Davidson, together with AMA, were instrumental in obtaining the same tax deduction that was provided in the stimulus plan for automobile, light truck and RV purchasers. The law also includes a 10 percent tax credit up to $2,500 for street-legal electric motorcycles purchased by December 2011.

Vectrix, maker of electric motorcycles and scooters applauds the tax credit announcing its own consumer incentive of $750 on 2007 models and $450 on 2008 models to encourage even more consumers to go electric. The Clean Energy Stimulus and Investment Assurance Act of 2009, which is part of the overall stimulus package, invests more than $2 billion in electric vehicle technology and provides consumers with tax credit provisions to purchase a wider variety of road-ready plug-in electric drive vehicles. This Clean Energy Act has the potential to stimulate the sale of up to 1.5 million plug-in vehicles, according to Plug In America.

"Companies like Vectrix are defining the future of clean energy vehicles," said Senator John Kerry (D-MA), who visited the company's New Bedford facility and test drove an all-electric Vectrix last spring. Along with other plug-in advocates, Vectrix supported the legislation and the bill proposed by Senators Maria Cantwell (D-WA) and Orrin Hatch (R-UT) that extended a 10 percent plug-in car tax credit to all-electric motorcycles. "This bill makes it possible for more consumers to purchase the cleanest running vehicles out there today," said Mike Boyle, Vectrix CEO. "It will have a huge impact not only on reducing emissions, but creating jobs and reducing our dependence on foreign oil."

As the largest dealer network for electric road vehicles in the U.S. consumer market today, Vectrix takes a leading role in supporting the electric vehicle component of the stimulus bill. The company also recently added two lower-priced urban commuting models—which will be available this spring—to make 100 percent electric vehicles available to a broader consumer base.

Tax Deduction for Motorcycles
For regular motorcycles and scooters, the sales and excise tax deduction applies to motorcycles purchased between Feb. 17 and Dec. 31, 2009, with a GVWR (gross vehicle weight rating) less than an 8,500 lbs., and costing less than $49,500. Individuals can take the deduction if they make less than $125,000, or $250,000 for joint filers. The deduction is phased out for taxpayers with income between $125,000 and $135,000 ($250,000 to $260,000 for a joint return). Individuals do not have to itemize to claim the deduction.

What qualifies as a motorcycle in the economic stimulus law? According to section 571.3 of title 49, Code of Federal Regulations (CFR), a motorcycle is defined under federal law as "a motor vehicle with motive power having a seat or saddle for the use of the rider and designed to travel on not more than three wheels in contact with the ground." In addition, a "motor-driven cycle means a motorcycle with a motor that produces 5 brake horsepower or less."

"This victory indicates that our legislators are starting to recognize how motorcycles reduce traffic congestion, provide efficient use of limited parking, lessen the impact on our roads and bridges and help reduce our dependence on foreign oil," said Moreland. Moreland added that the AMA would provide additional details of the tax deduction as soon as the Treasury Department issues its final rules. Among the questions to be answered are what model-year products are covered, including yet-to-be-released 2010 models; whether or not all unsold, new models are included, regardless of year; and whether or not off-road motorcycles are included.