Sales Tax Paid for a Vehicle Used In Business

Sales tax is added to the purchase price (cost basis) of a vehicle used in a business. You may recover the total cost of the vehicle, including the sales tax, via depreciation deductions claimed over the recovery period of the vehicle.

Less than 100% Business Use

If you use your vehicle less than 100% for business, you deduct the business related portion on Schedule C and the personal-use portion of the sales tax on Schedule A (if you itemize) assuming it greater than your state income tax deduction.

In other words, on Schedule A you have a choice of deducting the greater of sales taxes or state income taxes paid during the tax year.

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