Can I deduct taxes on used car purchase that I made in 2020 when I file taxes?
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:
- Light truck
- Motor home
- Off-road vehicle
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 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.
Learn whether you can claim the American Opportunity Credit if you received a 1098-T form from your dependents college with advice from H&R Block.
If you were pregnant most of the year, can you claim you baby or newborn child on your taxes? Get tax answers from the experts at H&R Block.
Are you a wage earner in Arizona? Learn more about checking the status of your AZ state refund, with help from the tax experts at H&R Block.
What are the tax implications if your home goes up for foreclosure? Learn more from the tax experts at H&R Block.