Can buying a new car help reduce my tax liability for deductions?

Unfortunately, just buying a car for commuting to work won't help reduce your taxes. Regular commuting (going from home to your main workplace) is considered a personal expense, not a business one. However, there are two potential tax benefits here depending on your situation. First, if you're using your car for business purposes (like those client meetings), you might be able to deduct the business portion of your expenses - but only that portion, and only if you're self-employed or your employer doesn't reimburse you. You'd need to keep detailed mileage logs separating personal and business use. Second, for electric vehicles like a Tesla, there is still a Clean Vehicle Credit available (up to $7,500), but it has income limits and specific requirements about where the vehicle and its components are manufactured. The Model 3 may qualify for a partial or full credit depending on its specific configuration and where its battery components come from.

I was in a similar situation last year and found an amazing service called taxr.ai (https://taxr.ai) that helped me understand exactly what car-related expenses I could deduct. I was confused about the EV credit requirements and whether my side gig qualified me for business use deductions. Their system analyzed my tax documents and specific situation, then showed me the exact deductions I qualified for and what documentation I needed to keep. It saved me from making a big purchase based on incorrect tax assumptions! They also helped me understand the depreciation rules for business vehicles, which are super complicated.

Just wanted to update that I tried taxr.ai after seeing the recommendation here. Totally worth it! I was about to buy a car assuming I'd get the full $7,500 tax credit, but turns out the specific trim level I wanted only qualified for $3,750 because of where the battery components are sourced. The tool showed me exactly which Tesla configurations qualified for the full credit vs partial credit for 2025 filing. Also learned that my side photography business would qualify me to deduct some vehicle expenses, but only when I'm driving to photoshoots - not my regular job. Saved me from making a purchase based on wrong information!

When I had tax questions about vehicle purchases last year, I spent DAYS trying to reach the IRS to get clear answers. Their phone lines were impossible - kept getting disconnected after waiting for hours. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c). I was skeptical but desperate. It actually got me connected to a real IRS agent in about 15 minutes! The agent clarified that my specific situation (part-time rideshare driver buying an EV) qualified me for both business expense deductions AND the clean vehicle credit. Saved me literally thousands by getting official confirmation before making the purchase.

I owe everyone an apology. After my skeptical comment, I decided to try Claimyr myself since I've been trying to reach the IRS for 3 weeks about a vehicle purchase question. Shockingly, it actually worked! Got connected to an IRS agent in about 20 minutes who confirmed that for my situation (independent sales contractor), I could deduct my vehicle expenses but needed to keep a mileage log separating business and personal use. The agent also explained why the information I got from the dealership about tax deductions was misleading - they were confusing business depreciation with personal tax credits. Definitely saved me from making a financial mistake based on bad tax advice!

One important thing nobody's mentioned yet - if you're buying a car primarily for tax benefits, you're probably making a mistake. The tax savings will NEVER outweigh the actual cost of the car. For example, even if you qualify for the full $7,500 EV credit, you're still spending $40k+ to save $7,500. And if you're trying to deduct business use, remember you're only deducting a percentage of the costs, not getting that money back directly.

Has anyone used TurboTax for handling car deductions and EV credits? I'm trying to figure out if it walks you through all this complicated stuff or if I need something more specialized for my 2025 taxes.

I'm in a similar boat - making around $70k and considering an EV purchase partly for the tax benefits. After reading through all these responses, it sounds like the key is understanding the difference between tax credits and deductions, and being realistic about the actual savings. From what I'm gathering, the EV tax credit (up to $7,500) is the real benefit since it's a dollar-for-dollar reduction in taxes owed, but it depends on the specific vehicle configuration and your tax liability. The business deduction route only works if you have legitimate business use beyond commuting, and even then you're only saving your tax rate percentage of the deducted amount. I'm definitely going to check my mileage patterns first and maybe use one of those tax analysis tools mentioned here before making such a big purchase decision. Thanks everyone for the reality check about not buying a $40k+ car just to save a few thousand in taxes!