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Tax Deduction for Vehicle Registration Fees

By: Kathy Teel July 11, 2012

Several factors can affect the used car taxes you pay, including:

  • The vehicle's weight.
  • The type of license plate you're getting.
  • The state in which you're registering the vehicle.
  • Whether the car is a trade in.

Vehicle Registration Tax Calculator

Every state has a different way of calculating the fees for used cars; checking out your state's DMV website will give you an idea of the approximate amount you'll be shelling out.

Vehicle Registration Tax Deduction

Fortunately, you may be able to recover some of that money by applying for a tax deduction for your vehicle registration fees. This vehicle tax deduction varies from state to state, so be sure to check with your accountant or a trusted financial advisor, as well as your state's Department of Revenue, before applying.

In order to receive the car registration deduction, your state must base its registration fee (or at least partly base it) on vehicle value, as opposed to weight. In other words, the cost must be in the form of a personal property tax, not an excise tax.

In addition, the state must charge the tax annually, even if you pay it more or less often, and you must have paid the tax during the current tax year.

To receive the deduction, you must:

  • Itemize all deductions on Form 1040, Schedule A (Itemized Deductions).
  • Include the used vehicle's registration fee (or the part of the fee based on value) on Line 7 of Schedule A.

Do you have any tips for folks who want to deduct their vehicle registration fees?

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