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Can I deduct the sales tax on a new vehicle?

3 Replies

Can I deduct the sales tax on a new vehicle?

Can I deduct the sales tax amount for the full 3 year lease term or just whatever incurred in this tax year?

Can I deduct the sales tax on a new vehicle?

What if I bought 1 car in 2018 and 1 in 2019
New Member

Can I deduct the sales tax on a new vehicle?

One may only deduct either sales tax or income tax, whichever is higher. So, deducting sales tax is usually only a benefit for someone who resides in a state that does not charge an income tax. TurboTax will calculate the best option for you so all guess work is eliminated. 

Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming don't levy an income tax.

However, depending on your specific tax situation, either could be most beneficial. You may enter the sales taxes paid on major items and TurboTax will see if that outweighs the alternative deduction (income taxes).

To enter sales tax in to TurboTax:

  1. Click the Federal Taxes tab at the top 
    Or the Personal tab if using Home & Business
  2. Then, Deductions & Credits
    Desktop users may need to click I'll choose what I work on here
  3. Scroll down to the "Estimates and Other Taxes Paid section"
    Online users may need to click Show more to expand the section
  4. Next to "Sales Tax" click Start/Update/Revisit
  5. Follow the interview screens to input this information


For more information on which deduction is right for you, please see this TurboTax FAQ:


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