There is no specific tax advantage to
purchasing a new personal use auto. There are some potential benefits,
however. They include:
- Personal property taxes are deductible on your taxes if your
state imposes one. A personal property tax is an annual tax based on
value. In some states they are part of your annual registration, in
other states they are billed separately by the county (as in South
Carolina) and in other states there is no personal property tax on
automobiles (as in Florida which taxes autos based on weight, not value.)
- Sales tax paid may be deductible, but this is usually only a
benefit in states that do not have a state income tax as only the higher
of the two is deductible.
- If it’s an all-electric or plug-in hybrid vehicle it
may be eligible for an energy tax credit.
Interest on a personal auto is not deductible. Personal property taxes and sales taxes are
only deductible if it is to your advantage to itemize deductions (i.e., your
itemized deductions are greater than your standard deduction.)
In
Turbotax,
- For personal property
taxes select Cars and Other Things you Own, then Personal Property
Taxes.
- For energy credits on
vehicles select Cars and Other Things you Own, then
Energy-Efficient Vehicles
- For sales taxes,
select Estimates and Other Taxes Paid, then select Sales Tax.
