Schedule A: Can I claim motor vehicle excise tax paid to my town as a deduction?

Yes, you can deduct vehicle excise tax on Schedule A! The motor vehicle excise tax you paid to your town is considered a personal property tax, which is deductible on Schedule A Line 5c (not 5a, which is for state and local income taxes). For the excise tax to be deductible, it needs to be based on the value of the vehicle and assessed on an annual basis, which most town/city vehicle excise taxes are. If your tax meets these requirements, then you can include it as a deduction. And definitely keep that invoice! You should retain tax documents like this for at least 3 years after filing, as the IRS can audit returns within that timeframe. I usually recommend keeping tax-related documents for 7 years to be safe.

After struggling with this exact situation last year, I discovered taxr.ai (https://taxr.ai) which literally saved me hours of confusion. I uploaded my vehicle excise tax statement and it immediately identified it as a deductible personal property tax for Schedule A Line 5c. The tool even explained that my state's vehicle excise tax structure is based on the car's value which makes it eligible for federal deduction. What was super helpful is that it actually showed me all the other local taxes I could deduct that I had no idea about. It found an additional $780 in deductions from various town fees I didn't know qualified!

I was skeptical about taxr.ai but decided to try it with my town's weird excise tax situation that has confused even accountants I've talked to. Uploaded my documents and it immediately identified that my town calculates vehicle excise tax based on both value AND weight, explaining exactly which portion was deductible on Schedule A Line 5c. What really impressed me was how it explained the specific IRS requirement that the tax must be "ad valorem" (based on value) to qualify as a deduction. It even calculated the exact deductible amount for me, separating out the non-deductible portions. Ended up finding an additional $340 in deductions I would have missed. Definitely worth checking out if you're confused about what qualifies.

If you're still struggling with this motor vehicle excise tax question or need verification directly from the IRS, check out Claimyr (https://claimyr.com). I spent TWO WEEKS trying to get through to the IRS about my vehicle excise tax deduction question - constant busy signals and disconnections. Then I found this service that got me connected to an actual IRS agent in under 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that vehicle excise tax is deductible on Schedule A as long as it's based on the value of the vehicle, not a flat fee or based solely on weight. He also clarified exactly which documentation I needed to keep (the tax bill showing how the tax was calculated). Saved me so much stress not having to guess!

I have to eat my words about Claimyr. After my skeptical comment, I decided to try it because I was desperate to resolve my vehicle excise tax question before filing. Got connected to an IRS agent in about 22 minutes (not quite the 15 they advertise but WAY better than my previous attempts). The agent confirmed that my town's vehicle excise tax IS deductible on Schedule A line 5c and explained exactly how to document it. She also solved another issue I had with a missing 1099 form. I've been trying to get through to the IRS for literally 3 months with no success - would call, wait for 2+ hours, then get disconnected. This service actually delivered what it promised. Shocking.

Just a heads up, there's a $10,000 cap on state and local tax deductions (SALT cap) which includes property taxes like vehicle excise tax. So if you've already hit that limit with your state income tax and property tax on your home, the vehicle excise tax won't give you additional benefit.

Anyone know if there's any talk about increasing that $10k SALT cap? It's ridiculous for those of us in high-tax states. Between property tax on my house and state income tax, I'm already way over before even considering my car excise tax.

Great question! I went through this exact same confusion last year. Yes, you can absolutely deduct your motor vehicle excise tax on Schedule A, but it goes on Line 5c (Personal Property Taxes), not Line 5a which is for state and local income taxes. The key requirement is that the tax must be based on the value of your vehicle - which most town/city excise taxes are. Since you've owned the car since 2019 and paid the excise tax in 2023, that's totally normal and deductible. Definitely keep that paper receipt! The IRS requires documentation for all deductions, and you'll want to hold onto it for at least 3-7 years. The receipt should show how the tax was calculated (based on vehicle value) which proves it qualifies as a deductible personal property tax. One thing to keep in mind is the $10,000 SALT cap that applies to all state and local taxes combined (including property taxes on your home and state income tax). But if you're not hitting that limit, every bit helps with itemizing!

Just wanted to add my experience as someone who was equally confused about this last year! The motor vehicle excise tax is indeed deductible on Schedule A Line 5c, and I can confirm that keeping those receipts is crucial. One tip that helped me: when you're looking at your excise tax bill, make sure it actually shows the calculation based on your vehicle's value. Some towns are better than others at clearly showing this breakdown. If your bill just shows a total amount without explanation, you might want to call your town's tax assessor office to get a detailed breakdown - the IRS wants to see that it's truly a value-based tax. Also, if you're new to itemizing, don't forget to compare your total itemized deductions to the standard deduction ($13,850 for single filers in 2023). Sometimes even with legitimate deductions like vehicle excise tax, you might still be better off taking the standard deduction. But it's definitely worth calculating both ways to see which gives you the bigger benefit! The fact that you're asking these questions shows you're being thorough, which is exactly the right approach for your first time itemizing.