I live in Oregon and when I enter car registration fees, it is giving me a deduction. But does OR allow car registration deduction?

AJ5 — Thu, 06 Jun 2019 00:47:05 GMT

The TurboTax software will allow you to enter an Oregon v...

GeoffreyG — Thu, 06 Jun 2019 00:47:07 GMT

The TurboTax software will allow you to enter an Oregon vehicle (car) registration fee as a deduction, just as it would allow you to enter a $1,000,000 charitable deduction if you attempted to, even where you hadn't actually donated to any charity at all . . . but that doesn't mean that you're legally allowed to do so. Please let us take a moment to explain.

The deduction for vehicle registration fees on a personal tax return is sometimes misunderstood. A vehicle registration fee itself is never tax-deductible; but if you live in a state that imposes an excise tax amount on your vehicle, and that is part of the registration process, then the excise tax portion of the registration can be deducted, but usually not the whole amount of the cost of registration (except where a state figures its registration charges entirely on the vehicle's value).

The legal reasoning for this is as follows. The IRS only allows that portion of a state registration fee that is based on the value of the vehicle to be included toward your other itemized deductions. Any flat fee portion doesn't count. This is why there are some 20+ states whose residents can potentially benefit from the deduction; but the remainder cannot: their states do not charge vehicle registration fees by value, and instead charge flat fees only.

There is a list of these qualifying states built-into the TurboTax software. A graphical image of this chart of states is also shown in one of the screen-capture images at the bottom of this answer (simply click to enlarge).

Unfortunately, the state of Oregon is not on this list. The reason for that is all of the Oregon registration fees and charges are based on factors other than that of the vehicle's value. Thus, you should not attempt to take a tax deduction for an Oregon vehicle registration.

Thank you for asking this important question; and we are sorry if this answer is something other than what you were hoping to hear. At least now you know the facts, however, and why this is so.

Re: The TurboTax software will allow you to enter an Oregon v...

skogensover — Sat, 22 Aug 2020 03:37:17 GMT

Thanks for sharing your knowledge.

topic I live in Oregon and when I enter car registration fees, it is giving me a deduction. But does OR allow car registration deduction? in Deductions & credits

I live in Oregon and when I enter car registration fees, it is giving me a deduction. But does OR allow car registration deduction?

The TurboTax software will allow you to enter an Oregon v...

Re: The TurboTax software will allow you to enter an Oregon v...