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Can I deduct sales tax on a used car I purchased?

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Can I deduct sales tax on a used car I purchased?

You can deduct sales tax on a new or used purchased or leased vehicle or boat but, if you live in a state with a state income tax, it probably isn't to your advantage to do so. To claim sales taxes on a vehicle or boat you need to meet two criteria. You must itemize deductions, and your sales tax deduction, including the sales tax on the vehicle must exceed your state income tax.

Realistically, in most states with a state income tax, the state income taxes would be higher than the state sales taxes, even with sales tax on a car added.

If you claim the standard deduction, you cannot deduct sales taxes.

The deduction for sales tax is under the deductions and credits tab. Go to:

  • Deductions and Credits
  • Estimates and Other Taxes Paid
  • Sales Tax.
  • Click Update next to Sales Tax.
  • Click Continue.
  • Select Easy Guide
  • Click Edit next to your sales tax rate.
  • Click Continue twice and you will then be on the page where you enter your car or other major purchases.

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