Special Tax Break on New Car Purchases Available in States With No Sales Tax

Special Tax Break on New Car Purchases Available in States With No Sales Tax

"The IRS and Treasury have determined that purchases made in states without a sales tax — such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon — can also qualify for the deduction.

The IRS said today that taxpayers who purchase a new motor vehicle in states that do not have state sales taxes are entitled to deduct other fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee. According to the IRS, Congress intended for these fees or taxes to qualify for this special tax deduction."

The above link is an IRS news release that also does a good job of summarizing the sales tax deduction for new cars bought on or after Feb. 16, 2009, through Dec. 31, 2009.