I bought my Prius out of state, and when I went to register it I found out that I didn't have to pay the 3% sales tax because I bought a hybrid! It was kind of funny. I live in a small town, and when I went to register it the clerks had never had to register a hybrid before. One of them casually mentioned that she thought she saw a flyer back in July that mentioned a different tax rate for hybrids, but no one could remember what the flyer said. She called the main office in Santa Fe and found out that there's no tax -- only the regular costs of registration and plates (around $100 for two years). I had been a little disapointed that New Mexico didn't have a tax deduction, but the 3% sales tax waiver is even better!
3% sales tax? Wow! We pay 6% state sales tax, plus a 'discresionary' tax from .5 to 1% for some counties, like mine and the ones I frequent. No income tax though, but this year I can now deduct the sales tax from federal income tax. A tax exemtion, which is like a credit, would be better though.
[font=Tahoma:6535be3aec] [/font:6535be3aec]Seems I read somewhere that the IRS will allow a deduction if you live in a state WITH sales tax, and allow an itemized deduction for the sales tax imposed on an automobile purchase.... Hmmmm.... could it be that the IRS has a "kind" streak?
I know what you mean, I grew up there and moved to Florida with that being one of the main reasons. You can deduct sales tax or income tax, not both.
I hope TurboTax knows about this so it can figure out which is best for me. I'm guessing the income tax will win out big time. But I get my $2K Prius deduction either way, right?
You get your $2k deduction either way. Re sales tax, TT 2004 allows you to enter "big ticket items" manually.
Here's a link to the sales tax tables provided by the IRS (pdf file): http://www.irs.gov/pub/irs-pdf/p600.pdf Should be a relatively simple matter to determine after adding any big ticket items and comparing the resulting figure to income tax paid.
