If you're planning to buy a new car, do it before Trump's tax plan goes into effect
- Republicans reached an agreement on their final tax bill on Wednesday, making it more likely the tax-reform bill will be passed before the end of the year.
- But taxpayers can take advantage of some deductions this year, before they are limited or eliminated.
- If you have been planning to buy a car, it might be smart to do it before December 31 so you can deduct the sales tax you pay.
Republican leaders on Wednesday reached an agreement on their final tax bill.And now it's starting to look like President Donald Trump's tax plan might actually be passed before the end of the year.
In case it does, there are some tax moves you can make now to prepare for the looming changes. Republicans have proposed capping the property tax, state and local income tax, and sales tax deduction to a total of $10,000. So, prepaying next year's property taxes before the end of 2017 could save some taxpayers significant cash.
There's another interesting tax-hack that many people might not know: if you're planning buy a car soon, do it before December 31.
Purchasing a car this December might be a smart idea for taxpayers in states with no state income taxes who itemize and claim the sales tax deduction, according to TaxAudit.
And it's not just for cars. Sales tax is deductible on a number of vehicle purchases, including motor homes, trucks, and even boats and planes.
Vehicle registration fees are also deductible
If you buy a car now, you could deduct vehicle registration fees paid before the end of the year, which are also likely to be axed under the new bill.Annual car registration fees might be partially deductible on your federal income taxes, although that's only under certain circumstances. According to TurboTax, a portion of the registration fee must be charged based on the vehicle's value - as opposed to its size, age, or other characteristics.
But remember, to deduct vehicle registration fees or the sales tax you pay, you have to itemize your deductions.