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Tax Deductible Car Registration Fees

Date posted: 06/22/2012

by Josh Tyson on
in Register Car

179 Tax Deductible Car Registration FeesTax deductions put funny songs in our head. Well, mostly “Pennies from Heaven,” because deductions have to rain quite a bit before you feel net effect. Still, it’s worth investigating tax deductible auto registration fees.

Just don’t start picturing monsoons of money.

Are registration fees deductible?

Generally, you can declare vehicle registration fees on your income taxes. Of course, we recently made the mistake of misplacing our registration receipt and, not knowing the amount, sheepishly decided to skip the deduction.

Hold on to those pieces of paper and list the deduction. They add up, which is when pennies start bruising your scalp.

Can I deduct the full amount of the registration fee?

Depends.

In California, for example, your registration payment is made up of several different fees ranging from weight fees, to county/district fees, to the Vehicle License Fee, with only the latter payment qualifying for a deduction. As a general rule, any fee you pay to register your vehicle is deductible as a personal property tax if that fee is based on a percentage of the vehicle’s value.

According to the California DMV, “The annual amount is based on the market value of the vehicle as determined by the DMV.” If you are really bored and/or good at math, here’s the equation: Purchase Price x VLF % (0.65%) x % in depreciation scale (100% to 15% over 11 years). For example: A $25,000 vehicle x 0.65% VLF x 90% (Year 2) = $147 VLF due.

Asleep yet?

Have a look at the list of fees over at Delaware’s DMV. Notice there is no registration or renewal fee based on the value of your car. Upshot: You don’t have to pay it. Downside: You can’t deduct what you don’t pay.

Question: How is Delaware making up for that lost revenue?

Can I do my own taxes and file for deductions?

Sure. Most online tax preparation programs can walk you through simple deductions.

If your deductions start piling up, however, it might be a good idea to hire an financial services company to file for you – especially if your deductions also include lots of business expenses. A professional can help you get the most out of them—sometimes negating the cost of their services with a bigger return.

That’s even more pennies from heaven.

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About Josh Tyson

Josh Tyson is a Denver-based writer, editor, poet, and musician (New Age Dad). He currently is the managing editor of UX Magazine. When Josh isn't talking tech, he covers the high-drama world of driver licensing and vehicle registration. More articles by Josh Tyson

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