Can I get a tax deduction if I bought a new car?

[dannynguyendental]

New car purchase

[xmasbaby0]

SALES TAX

You can enter the sales tax you paid for the car you purchased in 2024 by going to Federal>Deductions and Credits>Estimates and Other Taxes Paid> Sales Tax.  You will be asked if you paid sales tax on a major purchase, and you will be able to enter the sales tax you paid for your new vehicle. 

Sales tax is an itemized deduction.  Unless you have enough other itemized deductions to exceed your standard deduction the sales tax will have no effect on your tax due or refund.

“Major purchases” that you can enter for the sales tax deduction include:

Motor Vehicles (cars, trucks, motor homes, RV’s, sport utility vehicles and off-road vehicles

Aircraft or boats

Mobile homes

Manufactured housing

Building materials for major home improvements

You cannot deduct: furniture, jewelry, home electronics such as TV’s or computers

States with no sales tax:  Alaska, Delaware, Montana, New Hampshire and Oregon

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts)   The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the tax laws that have been in effect since 2018, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

The standard deduction makes some of your income “tax free.”  It is not a refund.  You will see your standard or itemized deduction amount on line 12 of your 2024 Form 1040.

2024 STANDARD DEDUCTION AMOUNTS

SINGLE $14,600    (65 or older/legally blind + $1950)

MARRIED FILING SEPARATELY            $14,600    (65 or older/legally blind + $1550)

MARRIED FILING JOINTLY $29,200    (65 or older/legally blind + $1550)

HEAD OF HOUSEHOLD $21,900    (65 or older/legally blind + $1950)

[SabrinaD2]

Yes, you can potentially get a tax deduction if you bought a new car, depending on a few factors: 

In addition to sales tax, as noted by Xmasbaby0, you may be able to receive tax deductions for the following:

• Business Use: If you use the car for business purposes, you might be able to deduct expenses related to the car, such as depreciation, fuel, and maintenance, under Section 179 of the U.S. tax code. You can learn more about deducting business expenses from the IRS here.
• Electric Vehicle Credit: If you purchased an electric vehicle, you might be eligible for a federal tax credit, which can significantly reduce your tax bill. More information on the electric vehicle tax credit can be found on the IRS website here.