When you buy a new or used car from a dealership, you’ll find there is more to the final cost of the vehicle than just what’s on the sticker. Taxes and fees can amount to several hundred dollars on top of the manufacturer’s suggested retail price of the car. Oftentimes these additional costs don’t have to come out of pocket and can be rolled into the financing program or car loan with which you’re buying the vehicle. To get an idea of what these costs can be in your area, you can use the calculator available at Cars.com.


The good news about having taxes added to the cost of your car is that you might be able to deduct them when tax filing season rolls around. These taxes are called sales taxes and in many states they are indeed tax deductible. You should do a bit of research in your area to determine if this is the case where you live.


Sales tax on large purchases like cars can amount to hundreds of dollars. This total can be treated as a tax deduction on your personal income tax. Filers can either claim a standard deduction on taxes which is a set amount for their filing class. Or, filers can choose to itemize their deductions which means that they list them all on their return and the corresponding monetary totals paid out. Sometimes the standard deduction is more than what itemized deductions total. But other times, especially if your year has included a big purchase like a car, itemizing your deductions can me worth the hassle to lessen your overall tax burden.


If you usually file your taxes on your own, and itemizing your deductions is a little intimidating, you might consider enlisting the help of a tax professional in your area. Also, don’t forget that if you drive your new vehicle for business purposes and aren’t reimbursed for those costs, those costs can be itemized too.