Generally, the tax paid on purchase is a sales tax and may be
deductible under some circumstances. 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.
Note: for an auto, the tax rate doesn't need to be the same as the general tax rate. For a boat, it does.
A
personal property tax is an annual tax based on the car's value. It
might be paid on purchase, or (as in South Carolina) it may be billed
annually by your county.
