Q:

Can a 2014 fuel-efficient automobile purchase qualify as a standard deduction?

A:

Quick Answer

The federal income tax standard deduction is used in lieu of itemized deductions, so it is not possible to claim any deductions for fuel-efficient car purchases and the standard deduction. However, there are several federal tax credits for electric and hybrid vehicles that can be claimed with the standard deduction.

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Full Answer

The federal government offers tax credits of up to $7,500 for purchasers of qualified electric or plug-in hybrid vehicles as of 2015. Rather than acting as a deduction from taxable income, these credits directly reduce the tax liability of the purchaser. For example, a person who had a $10,000 federal income tax liability and purchased a vehicle qualifying for the full credit would only owe $2,500 in income taxes after the credit.

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