Question

Is there a vehicle sales tax deduction? Can I deduct sales tax on a vehicle purchase?

Answer

There is a general sales tax deduction available if you itemize your deductions. You will have to choose between taking a deduction for sales tax or for your state and local income tax. You can deduct sales tax on a vehicle purchase, but only the state and local sales tax. You’ll only want to deduct sales tax if you paid more in state and local sales tax than you paid in state and local income tax.

How to Claim the Vehicle Sales Tax Deduction

The rate of sale tax you paid must be the same as the general sales tax rate, otherwise you can only deduct the general sales tax rate.

To deduct vehicle sales tax, you can either:

  • Save all sales receipts and deduct actual sales taxes paid throughout the year, or
  • Use the IRS sales tax tables to figure your deduction. These tables calculate the estimated sales tax you paid based on your income. They don’t include large purchases. So, to the amount in the table, you can add the sales tax you paid on any of these:
    • Cars
    • Motorcycles
    • Boats
    • Airplanes
    • Motor homes

If the vehicle that you purchased is used in your business and you deduct the sales tax on the business return, possibly on Schedule C, Form 1040, then you cannot deduct the sales tax on Schedule A, Form 1040.

New Updates to the Amount You Can Claim

There is a limit of $10,000 ($5,000 if MFS) on the amount of sales tax you can claim in 2018 to 2025. The $10,000 limit applies to the total amount a taxpayer can claim for real property taxes, personal property taxes, and state and local income taxes (or general sales tax if elected).

Related Topics

Related Resources

Tips for Filing Jointly for The First Time

Learn how to file jointly for the first time after getting married. The tax pros at H&R Block explain what you need to know about your new filing status.

How Does Changing Jobs Affect Your Tax Return?

Changing jobs can come with tax implications like job search and moving expense deductions. Learn more about these potential benefits at H&R Block.

HSA Tax Deduction Rules

Learn more about HSA tax deductions, including deducting medical expenses paid from an HSA account, with advice from the tax experts at H&R Block.

What Is An ITIN? All You Need To Know

An ITIN is issued by the IRS to help people file taxes without a Social Security number. Learn how to get an ITIN number, who qualifies, and where to apply.