How to Find the Sales Tax Paid on Your Car

When purchasing a vehicle, a portion of the cost is the state and local sales tax. This tax is calculated as a percentage of the vehicle’s purchase price and is a charge in most jurisdictions. The primary reason to determine the exact amount of sales tax paid is for federal income tax purposes. Taxpayers who itemize deductions can deduct state and local taxes, which may include the sales tax paid on a major purchase like a car, and this can potentially reduce their overall tax liability.

Reviewing Your Vehicle Purchase Documents

The most direct method to find the sales tax you paid is to examine the paperwork from the dealership. The final bill of sale, also called a buyer’s order or purchase agreement, provides a detailed breakdown of every cost. This document will contain a specific line item for the sales tax collected, labeled as “Sales Tax” or a similar descriptor, showing the exact dollar amount.

The sales tax amount is calculated based on the taxable price of the vehicle. This may include the vehicle price and certain fees, less the value of any trade-in vehicle.

If your vehicle purchase was financed, the sales tax information is also in the financing agreement or loan contract. This document itemizes the total amount being financed, and the sales tax is included as a separate line item. The tax is rolled into the principal of the loan as part of the “Amount Financed” breakdown.

Checking State Titling and Registration Paperwork

Paperwork filed with your state’s motor vehicle agency is another source for sales tax information. Since proof of sales tax payment is required to issue a title and registration, the amount is recorded on official state forms and receipts.

The application for certificate of title is a primary document in this process. It required a declaration of the vehicle’s purchase price and the corresponding sales tax paid. A copy of this application will contain the sales tax figure.

The official receipt you received after paying for your title and registration fees also includes an itemized list of all payments made to the state. This receipt will show a line item for the sales tax collected or confirmation that it was paid via the dealer.

Alternative Methods if Documents are Unavailable

If you cannot locate your original purchase or registration documents, contact the dealership where you bought the vehicle. Their finance or accounting department maintains detailed records of every transaction and can provide a copy of your bill of sale or a summary of the charges, including the sales tax paid. When you call, be prepared to provide your name, the vehicle’s purchase date, and the Vehicle Identification Number (VIN).

If the dealership cannot assist, contact the state agency that handles vehicle titles and registrations, such as the Department of Motor Vehicles (DMV). They have a record of the tax payment required to issue your title and can provide a statement of the sales tax paid on your vehicle. This may require submitting a formal records request, which can be done online or by mail, and may involve a small fee.

Using the IRS Sales Tax Tables for Deductions

When filing your federal income tax return, you can choose to deduct either your state and local income taxes or your state and local general sales taxes for the State and Local Tax (SALT) deduction. If you elect to deduct the sales taxes, the IRS provides optional general sales tax tables. These tables give you a standard deduction amount based on your income and location, eliminating the need to save every receipt.

The sales tax paid on a vehicle is an exception that benefits taxpayers. You are permitted to add the actual amount of sales tax paid on a major purchase to the standard amount listed in the IRS tables. This provision applies to sales tax on purchased or leased cars, motorcycles, motor homes, and other specified items.

To calculate your deduction, you first determine your standard sales tax deduction from the IRS tables. You then add the exact amount of sales tax from your vehicle purchase documents to that figure. However, if the sales tax rate you paid on the vehicle is higher than your area’s general sales tax rate, you can only include the amount of tax you would have paid at the general rate. The IRS also offers an online Sales Tax Deduction Calculator to simplify this process.

The total deduction for all state and local taxes—which includes property taxes plus either income or sales taxes—is capped. This SALT deduction is limited to $10,000 per household per year ($5,000 for married individuals filing separately). While the sales tax on your vehicle increases your potential sales tax deduction, your total claimed SALT deduction cannot exceed this overall limit.