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Tax Deduction for Vehicle Registration Fees
June 4, 2024 - 5 min read

Tax Deduction for Vehicle Registration Fees

If the vehicle registration fee is based on the value of the vehicle, you can claim a federal tax deduction. However, if the fee is a flat rate, you will not be able to deduct it for your personal vehicle. 

How the vehicle registration fee is calculated depends on the state you live in. Get an overview of how it’s calculated in each US state in this article. 

Vehicle registration fees may also be calculated based on other aspects, such as vehicle weight or age.

Can you deduct vehicle registration fees on federal taxes?

It’s possible to deduct vehicle registration fees on your federal tax return. However, for personal vehicles, you can only deduct those that are calculated based on the vehicle’s value. Taxes that are based on the value of property are often called ad valorem taxes.

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Deducting vehicle registration fees 

For a personal vehicle, you can only deduct registration fees if you’re itemizing instead of taking the standard deduction. Vehicle registration fees based on the car’s value fall under the state and local tax (SALT) deduction, as they’re considered a personal property tax. 

For most filing statuses, the SALT deduction is limited to $10,000 per household. However, if you’re married and filing separately, the SALT deduction is capped at $5,000. You will input your SALT deduction on Schedule A of Form 1040.

If you’re self-employed and use your car for business purposes, you can deduct vehicle registration fees regardless of whether you’re itemizing, and you may even be able to deduct fees that aren’t value-based. However, you can only deduct vehicle registration fees if you’re using the actual expenses method to calculate your car expenses. The deduction is based on the percentage of the fees related to your business use of the vehicle.

What states can you deduct vehicle registration fees?

Not all states have value-based vehicle registration fees. If none of your vehicle registration fees are based on the car’s value, you won’t be able to deduct them for a personal vehicle. Here’s a guide to the states that have value-based car registration fees, along with the specific fees that fall into this category.

State

Value-based and, therefore, deductible portion

Alabama

Ad valorem tax

Alaska

Not deductible.

Arizona

Vehicle license tax

Arkansas

Not deductible. However, you can deduct the value-based ad valorem tax paid to your county. 

California

Vehicle license fee

Colorado

Ownership tax

Connecticut

Not deductible. However, you can deduct the value-based property tax paid to your city or county.

Delaware

Not deductible.

Florida

Not deductible.

Georgia

Annual ad valorem tax. This applies to most cars purchased before March 1, 2013, as well as non-titled vehicles. You cannot deduct the title ad valorem tax (TAVT). 

Hawaii

Not deductible.

Idaho

Not deductible.

Illinois

Not deductible.

Indiana

Excise tax fees

Iowa

Value-based portion of vehicle registration fee

Kansas

Not deductible. However, you can deduct the value-based personal property tax paid to your county.

Kentucky

Value-based portion of vehicle registration fee

Louisiana

Value-based portion of license plate fee

Maine

Not deductible. However, you can deduct the value-based excise taxes paid to your city or county.

Maryland

Not deductible.

Massachusetts

Motor vehicle excise tax

Michigan

License fee on vehicles with a model year of 1984 or newer

Minnesota

Registration tax

Mississippi

Ad valorem tax

Missouri

Personal property tax paid to the county

Montana

County option tax

Nebraska

Motor vehicle tax

Nevada

Motor vehicle tax

New Hampshire

Municipal fees

New Jersey

Not deductible.

New Mexico

Not deductible.

New York

Not deductible.

North Carolina

Vehicle property tax

North Dakota

Not deductible.

Ohio

Not deductible.

Oklahoma

Not deductible.

Oregon

Not deductible.

Pennsylvania

Not deductible.

Rhode Island

Not deductible. However, you can deduct the value-based excise tax paid to your city or town.

South Carolina

Value-based personal property tax 

South Dakota

Not deductible.

Tennessee

Not deductible.

Texas

Not deductible.

Utah

Not deductible.

Vermont

Not deductible.

Virginia

Not deductible. However, you can deduct the value-based personal property tax paid to your city or town.

Washington

Regional Transit Authority (RTA) tax if required by your county.

West Virginia

Not deductible. However, you can deduct the value-based personal property tax paid to your county.

Wisconsin

Not deductible.

Wyoming

Value-based vehicle registration fees paid to the county. 

 

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