Quote:
Originally Posted by dudafunk
I guess basically you just subtract the car cost from your taxable income for both federal and state tax forms - and THEN carry on with the usual calculation (apply std deductions etc. etc.)... but anyway, I confirmed, its not going to result in a $900+ saving by any means as someone above pointed out.
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That's not correct. You do not deduct the cost of the car from your taxable income. That would be a massive deduction.
You deduct the sales tax that was paid on the car on your federal return, not your state return. Again, this has absolutely nothing to do, what-so-ever, with state tax returns. It's only federal.
Also, as someone pointed out, the amount of money this reduces your tax burden by is directly proportional to the percentage of your adjust gross income that is actually taxed.. i.e., the higher your tax bracket, the more money you save on your tax bill.