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If I bought a used car in 2013, can I deduct the sales tax I paid on it?

No. The American Recovery and Reinvestment Act lets you deduct state and local sales and excise taxes you paid on the purchase of a new:

  • Car
  • Light truck
  • Motor home
  • Motorcycle

The deduction is currently available on new vehicles bought from Feb. 17, 2009, through Dec. 31, 2013. You can deduct either of these:

  • State and local sales taxes, including those paid on a new vehicle
  • State and local income taxes

You can’t deduct both.

If you deduct sales taxes, you can either:

  • Save sales receipts and deduct actual sales taxes paid
  • Use the IRS’s sales tax tables to figure the deduction. You can find the tables in the Form 1040 instructions.

The deduction is limited to the taxes and fees paid on up to $49,500 of the purchase price of an eligible vehicle. The deduction is reduced for:

  • Married filing jointly with modified adjusted gross incomes (AGI) of $250,000 to $260,000
  • Other taxpayers with modified AGI of $125,000 to $135,000

If your income is higher, you don’t qualify.

 

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