The short answer is yes. State sales taxes paid with respect to a vehicle
lease are deductible in the same manner as if the vehicle was purchased
(generally as a Form 1040 Schedule A itemized deduction).

If the vehicle is a business vehicle (whether leased or purchased), your
deduction would instead be a business expense deduction based upon the
percentage of business use of the vehicle (usually deducted on Form 1040
Schedule C or C-EZ). If the vehicle is not used 100% for business (be sure
to keep a log of business use), the deduction is split between Schedule C
and Schedule A. For example, let's say the state sales taxes paid on the
vehicle (leased or purchased) amount to $100. You use the vehicle for
business 7,500 miles of the 10,000 total miles the vehicle is used during
the year 2004. This equates to 75% business use (and 25% personal use).
You would have a personal, Schedule A sales tax deduction of $25 (25% of
$100) and a business sales tax deduction of $75 (75% of $100).

If there is no business use of the vehicle, then the total sales taxes paid
on the vehicle are a Schedule A deduction.

Hope this helps you!

David
2000 coupe, MY

"sbright" > wrote in message
...
> (I know this thread is a little off topic...)
>
> Does this new rule work for leases as well? In MD, they calculate sales
> tax on the negotiated price of vehicle, rather than a monthly sales tax on
> t he lease pmt.
>
> -Stan
>
>
> "Scubabix" > wrote in message
> news
>> Thanks for the extra info.
>>
>> Rob
>>
>> "Okiemoose" > wrote in message
>> news:Kwqxd.15237$F25.1654@okepread07...
>>> Actually, that option is available to ALL taxpayers in ALL states who
>>> itemize deductions. A taxpayer can choose to deduct either state and
>>> local income taxes paid OR sales taxes paid. Obviously, for those who
>>> live in states which do not assess income taxes, this is a no-brainer --
>>> it's a new extra deduction.
>>>
>>> The law states that a taxpayer may deduct actual sales taxes paid during
>>> the year as evidenced by records and receipts, or the taxpayer may
>>> choose to use an estimated amount taken from an IRS table based upon
>>> family size and income.
>>>
>>> This law change came into being as of October 23, 2004, when the
>>> American Jobs Creation Act was enacted. Since this enactment was late
>>> in the year, many taxpayers won't have sales tax receipts from before
>>> October 23, 2004 (or before becoming aware of the law change), and will
>>> consequently use the table to determine the maximum deduction allowable.
>>>
>>> For states that assess a sales tax on a car or boat purchase, this sales
>>> tax amount is something that would figure into the total when adding up
>>> sales tax amounts from retained receipts. But extra good news is the
>>> fact that sales taxes on the purchase of a car and/or a boat can be
>>> ADDED to the amount from the IRS table to maximize the deduction.
>>>
>>> Even if you pay state income tax, it would worth your while to determine
>>> your sales tax deduction -- the amount may be larger than the amount of
>>> state income taxes you pay and therefore lower your tax bill. If your
>>> state has no income tax, congratulations on your new, EXTRA deduction!
>>>
>>> If you bought a Corvette (or other car(s) or boat(s)) during 2004 and
>>> paid sales taxes on the purchase, this new law provision could save you
>>> some bucks on your taxes.
>>>
>>> Happy, less-taxing motoring in your 'Vette!
>>>
>>> David
>>> 2000 Coupe, Millennium Yellow
>>>
>>> "Scubabix" > wrote in message
>>> ...
>>>>I just received some good news from my accountant. There is a new
>>>>allowance in the Tax code for people living in states that do not have a
>>>>state income tax. It allows a deduction for sales taxes paid.
>>>>Particularly large item purchases. Say, like a car, like a Corvette?
>>>>Check with your tax preparer for details.
>>>>
>>>> Rob
>>>> 78 & 96 Coupes (Red of course)
>>>>
>>>
>>>
>>
>>
>
>