I bought a 2005 honda accord in 2006. Are the sales taxes I paid, the vehicle excise tax?

Question

I'm doing my taxes on-line. A prompt comes up asking about personal property taxes about vehicles. I'm hoping I can deduct the taxes on the vehicle I bought in 2006, but it says "vehicle excise tax" and registration fees. I'm confused. Please help. Thanks.

Answer 1

No, it's not the sales tax.

It is the annual fee paid to register a car. Here in Minnesota, they are called "Car Tabs". They are called different things in different places. It varies by state as to whether any of the annual fee is deductible as a "Personal Property Tax".

Answer 2

For the sales tax: If you itemize, you have the choice of deducting state and local income taxes, or sales tax. If you have little or no state and local income tax, you'd probably choose sales tax. There's a table by state, by income level, by family size to give you an amount of sales tax you can deduct without saving and totalling receipts - if you use that table, you can add the amount of sales tax you paid on the purchase of a car, boat, or plane.

Some of the annual fees might also be deductible as personal property taxes - that depends on what taxes are charged by the state. The basic charge for registration and license plate is NOT deductible, but many states also charge an additional amount based on the value of the car - that amount would be deductible as personal property tax.

Answer 3

No. Some states levy a personal property tax on vehicles. If this tax is based upon the value of the vehicle you can deduct the tax under property taxes on Schedule A. If it's based upon the vehicle's weight or horsepower you cannot deduct it.

You may be able to deduct the sales tax. If you itemize you can either deduct either state income taxes paid or state sales taxes paid. You should take whichever one is higher as it will lower your tax liability the most.

If you choose to deduct state sales taxes, there's a tax table that you must use. However if you paid tax on a big-ticket item such as a car, boat, motorhome, airplane, major appliances, etc. you can add the tax for those items to the amount in the table.