Is the Highway tax and Property tax the same for North Carolina

[IreneS · Accepted solution]

No.  They are different.

North Carolina collects a Highway Use Tax (HUT) on vehicles instead of a state sales tax. The tax is assessed each time a title is transferred.  Money that is collected for the Highway Use Tax goes to the NC Highway Trust Fund and the State's General Fund. That money is then used to improve the roads of North Carolina.

The North Carolina Property tax on Motor Vehicles is for annual vehicle tag renewals and vehicle property taxes  combined into one billing.

[Carl]

No. North Carolina collects a 3% Highway Use Tax on vehicles in lieu of a state sales tax (General Statute 105-187.2). North Carolina’s property tax rates are relatively low in comparison to those of other states. The average effective property tax rate in North Carolina is 0.86%.

For vehicles, some state documents refer to it as a "vehicle property tax". So that's where it's possible for confusion to result.

[Hal_Al]

The NC vehicle property tax  is deductible as a personal property tax, on the federal return.

The highway use tax is NOT deductible as a personal property tax. However, the highway use tax is deductible as a sales tax.

BUT

You are allowed to deduct state & local income taxes OR sales tax; but not both. This provision was added primarily to allow a deduction for people in states without income tax. Sometimes, with a big purchase (like a car), you may be better off deducting sales tax even if your state has an income tax. Enter both, under deductions, and TurboTax will calculate the best option. If you don't have all your receipts (and hardly anybody does), you are allowed to use tables (built into TT from IRS Pub 600) based on income & exemptions, You can then add major purchase sales tax (highway use tax) to the table amounts. Neither is deductible if you use the standard deduction instead of itemizing.

[Tax-Ques]

But what if the vehicle purchased is a handicap accessible van?  That Highway use tax should be deductible along with the state income tax correct?

[JohnW152]

No, there’s no provision for that.

@Tax-Ques