Sales Tax Deduction on new car

[skj]

In the "Sales tax deduction" I entered "actual sales tax paid" for a new car purchased in 2025 under "major purchases. TT calculated and entered the Michigan sales tax. Then askes "which deduction would you prefer. I selected the larger deduction which was $2600. Is this included or calculated on my federal return? It's shown on Schedule A.  I am filing with a standard deduction, not itemized. I read that if your vehicle was not final assembled in the US sales tax was not deductible. 

[xmasbaby0]

If you are using standard deduction, your sales tax will have no effect on your federal tax due or refund.   Sales tax is an itemized deduction.   Unless you have enough other itemized deductions like mortgage interest, charity donations, medical expenses, etc. to exceed your standard deduction, the sales tax will not have any effect.

[xmasbaby0]

There is a new deduction for the purchase of a new 2025 car----you can enter the interest paid  on the car loan.

This deduction is not an itemized deduction--it will reduce the amount of income you are taxed on.

CAR LOAN INTEREST

Go to Federal>Deductions and Credits>Cars and Other Things You Own>Car Loan Interest

The amount will go on Schedule 1a and end up on Form 1040 on line 13b

[skj]

I do have enough itemized deductions. However, the refund amount is exactly the same as filing with a standard deduction. Seems odd. The difference is only $624 more on line 12e of form 1040 if filing itemized.

When filing "standard deductions" line 12e on form 1040 shows $17,750. When I look at Schedule A, line 17 shows $18,374 which should transfer to line 12e on the 1040 but it does not. If the standard deduction is $15,750, why is $17,750 showing?

[xmasbaby0 · Accepted solution]

 If you are 65 or older, your standard deduction is higher.   If you are Single, it is $15,750 + $2000 = $17,750 

2025 STANDARD DEDUCTION AMOUNTS

SINGLE $15,750  (65 or older/legally blind + $2000)

MARRIED FILING SEPARATELY $15,750  (65 or older/legally blind +1600)

MARRIED FILING JOINTLY $31,500  (65 or older/legally blind + $1600)

HEAD OF HOUSEHOLD $23,625 (65 or older/legally blind + $2000)

@skj

[skj]

Thanks for explaining the standard deduction. But Schedule A, line 17 shows  a deduction of $18,374. Why didn't that transfer over?