Question

Can I deduct taxes on used car purchase that I made in 2020 when I file taxes?

Answer

No. You cannot deduct sales tax on a used car. However, you can deduct state and local sales and excise taxes you paid on the purchase of a new:

  • Car
  • Light truck
  • Motor home
  • Motorcycle
  • Off-road vehicle
  • Boat
  • Aircraft

The deduction is currently available on new vehicles bought in 2020. If the sales tax on these types of vehicles is higher than the general sales tax rate, you can only deduct sales tax up to the general sales tax rate. You can deduct either of these:

  • State and local sales taxes, including those paid on these:
    • New vehicle
    • Home
    • Home improvements
  • State and local income taxes

However, 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 or use the IRS calculator.

Related Topics

Related Resources

Alabama Income Tax

Looking for information on Alabama state income tax? Read here to find out who pays, how to pay and more from the tax pros at H&R Block.

Will Depreciation Affect A Tax Deduction?

Will depreciation affect an itemized deduction? Learn more from the tax experts at H&R Block.

California State Tax

Are you a wage-earning California resident? Learn more about California state tax, with help from the tax pros at H&R Block.

Claiming a Newborn on Your Taxes: What You Need to Know

Has there been a birth in your family? Let the experts at H&R Block explain what you need to know about claiming a newborn on your taxes.