Can I deduct an excise tax?
Generally speaking, true excise taxes cannot be deducted on your personal return. This would include things like fuel tax and excise taxes paid to your city or state when you sell your home. Excise taxes that are necessary to conduct business can usually be deducted as a business expense.
But here's where things get a little tricky – some states and localities attach the erroneous label "excise tax" to personal property taxes, which may be deductible on your personal return. Some states even refer to certain vehicle registration fees as an "excise" tax.
"Excise taxes" imposed on personal property (vehicles, campers, boats, RVs, etc.) are an allowable deduction if two conditions are met:
- The "excise tax" is determined by the property's value, usually a set percentage; and
- The "excise tax" is imposed annually.