Can I deduct NC Highway Use Tax in my return?

[Tiki · Accepted solution]

Yes, you can deduct the use tax as a part of your sales tax. Instead of collecting state sales tax, North Carolina collects a Highway use Tax (HUT) on vehicles. The tax is assessed each time a title is transferred.

Please refer to the North Carolina Division of Motor Vehicles for more details.

You will enter your expenses in the Sales Tax section. 

1. Select Federal Taxes.

2.  Select Deductions and Credits.

3. Select "I'll choose what I work on".

4.  Scroll down to "Estimates and Other Taxes Paid"

5. Select "Sales Tax".

[Tom in Carolina]

How does this answer relate to: The government allows you the option of taking either a deduction for state and local income taxes, or a deduction for sales tax paid throughout the year. i.e. if the estimated sales tax + the use tax is less than the state income tax deduction - the answer is you CANNOT deduct the use tax. Not trying to be a wise guy.

[WNeumann]

The NC law has exemptions from paying the tax but gives you the choice of taking the state and local income deduction or the estimated state sales tax deduction. Not both Turbo does not allow the user to add the HUD as a deduction.

The law changed in 2017 to make the purchase of a vehicle a sales transaction of 3% without a dollar cap. The old cap was $300. The dealership did not realize this change and thought that it had been this way for a long time. 

So I have a partial year of property tax and the Highway Use Tax as a surprise to my purchase.

The HUD TAX is close to $1,200 in addition to the $480 property tax. 

Here is the link to the NCDOT HUD TAX Exemption https://www.ncdot.gov/dmv/title-registration/taxes/Pages/exemptions.aspx

You do receive a large credit to purchase an EV but good luck locating a charging station when the battery is running out.