Can I deduct local sales tax on a new car purchase?

[Hal_Al · Accepted solution]

Yes, technically. But practically, probably not, because it is only an itemized deduction.

 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 TT 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 to the table amounts. Both the state and local sales tax is deductible. Neither is deductible if you use the standard deduction instead of itemizing.

In TurboTax, enter at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-I'll choose what I work on

-Scroll down to:

--Estimates & other taxes paid

   -Sales tax