J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

16.8 Automobile License Fees

You may not deduct an auto license fee based on weight, model, year, or horsepower. But you may deduct a fee based on the value of the car as a state personal property tax if these three tests are met: (1) the fee is an ad valorem tax, based on a percentage of value of the property; (2) it is imposed on an annual basis, even though it is collected more or less frequently; and (3) it is imposed on personal property. This third test is met even though the tax is imposed on the exercise of a privilege of registering a car or for using a car on the road.

The majority of state motor vehicle registration fees are not ad valorem taxes and do not qualify for the deduction. Various states and localities impose ad valorem or personal property taxes on motor vehicles that may qualify for the deduction. Contact a state or local authority to determine whether a license fee qualifies.

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Filing Tip

Value Portion of Auto License Fee

If an automobile license fee is based partly on value and partly on weight or other tests, the tax attributed to the value is deductible as an ad valorem tax and is deductible as a personal property tax on Schedule A.

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