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How does buying a car affect taxes?

I'm wondering if I can make any tax deductions with the purchase of my car. How does buying a car affect my taxes?

avatar
Matthew Macgugan · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
You may be able to make tax deductions if you buy a car for personal or business use. 
  • Sales tax: The IRS permits you to deduct either local and state sales taxes or local and state income taxes, but not both.
  • Operation costs: If you use the vehicle for
    business
    , charity, moving, or medical needs, you can deduct some operational expenses. 
  • Tax credits: Hybrid and electric vehicles also come with
    separate tax credits
    . 
If you aren’t sure about how to itemize your deductions, you may want to speak with a tax specialist when tax season rolls around. Until then, keep all of your
sales documents
 safe and organized.
MORE:
Qualifying for a car loan tax deduction
buyingTaxesCar Buying
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