Yes, you can deduct sales tax paid on vehicles as part of itemized deductions, but whether you get any tax benefit from doing so, is another question.
First, you can deduct either sales tax or state income tax, so depending on where you live, you may be better off with state income tax. TurboTax will help you compare the two deductions and pick the best one for you.
This is where you enter the deduction for sales tax:
- Select Federal from the left side menu.
- Select Deductions and Credits.
- Scroll down to Estimates and Other Taxes Paid and expand the section.
- To the right of Sales Tax, click Start or Revisit.
- Select Continue with Sales Tax.
- Select Easy Guide.
- Answer the questions about where you lived.
- On the screen Major Purchases, answer Yes.
- Enter the information about your car purchases.
- Continue through the section and TurboTax will let you know which deduction is best for you.
Second, your total state and local income tax deduction is capped at $10,0000 ($5,000 if married filing separately). This limit applies to the total of state and local sales tax or income tax, property tax, and personal property tax.
Third, you deduct either your total itemized deductions, or the standard deduction based on your filing status:
The standard deduction amounts for 2022:
- Single is $12,950
- Married filing jointly is $25,900
- Head of household is $19,400
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