Overhaulin'

The tax you pay when you buy a used car (use tax), is that deductible?

Can I claim some of that car tax money when I fill my tax forms in April?

Public Comments

1. Maybe. If you elect to deduct your state sales tax paid for the year instead of your state income tax, you can deduct the sales tax paid on the car. This assumes that: A) Your sales tax paid is higher than your state income tax; and B) You itemize deductions. If either A or B are false, you will get no tax benefit from it.
2. Assuming you are talking about use tax (not sales tax), you can deduct this, but it might not be advantageous to do so. For the past couple of years, and, due to recent legislation, for 2006, as well, you can deduct sales tax INSTEAD of state income taxes. You will have to calculate which deduction is better. Your sales tax will include an amount you can find in tables published by the IRS plus amounts paid for certain items, one of which is a car.