Question

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

Answer

There is a vehicle sales tax deduction but you will have to choose between taking this deduction or claiming your state income tax. You can deduct sales tax on a vehicle purchase, but only the state and local sales tax. However, you can only claim this deduction if you do so instead of claiming a deduction for state income tax. You’ll only want to do this if you paid more in state and local sales tax than you paid in state income tax.

If you deduct sales tax, you can either:

  • Save sales receipts and deduct actual sales taxes paid.
  • 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

See the Form 1040 instructions for the tables.

 

Related Topics

Related Resources

Claiming a Dependent Relative on Taxes

Is your relative a qualifying dependent? Explore your options for claiming relatives on your taxes. Get tax answers from H&R Block.

Documents Needed To Itemize Deductions

Find out what documents are needed to itemize deductions on your federal tax return with advice from the tax experts at H&R Block.

Tax Implications of Starting a New Business

The startup tax or new business tax is a topic many new business owners shy away from. Don't get caught off-guard. Review these tips provided by our tax pros.

Electric Vehicle Tax Credit

Learn what qualifies for the electric car tax credit from the tax experts at H&R Block.