Does Car registration fee include State and Local Sales Tax for purchase of new car?

[xmasbaby0]

No.  Those are separate things.  Unless you have enough itemized deductions to exceed your standard deduction, neither the car registration or sales tax will have any effect on your tax due or refund.

SALES TAX

You can enter the sales tax you paid for the car you purchased in 2022 by going to Federal>Deductions and Credits>Estimates and Other Taxes Paid> Sales Tax.  You will be asked if you paid sales tax on a major purchase, and you will be able to enter the sales tax you paid for your new vehicle. 

Sales tax is an itemized deduction. “Major purchases” that you can enter for the sales tax deduction include:

Motor Vehicles (cars, trucks, motor homes, RV’s, sport utility vehicles and off-road vehicles

Aircraft or boats

Mobile homes

Manufactured housing

Building materials for major home improvements

You cannot deduct: furniture, jewelry, home electronics such as TV’s or computers

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Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts)   The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

Your standard deduction lowers your taxable income.  It is not a refund.  You will see your standard or itemized deduction amount on line 12 of your 2022 Form 1040.

2022 STANDARD DEDUCTION AMOUNTS

SINGLE $12,950  (65 or older + $1750)

MARRIED FILING SEPARATELY $12,950  (65 or older + $1750)

MARRIED FILING JOINTLY $25,900  (65 or older + $1400 per spouse)

HEAD OF HOUSEHOLD  $19,400  (65 or older +$1750)

Legally Blind + $1750

[MonikaK1]

Your car registration fee may include a deductible Personal Property Tax. This varies by state. It is separate from the sales tax. 

Your car registration is deductible if it’s a yearly fee based on the value of your vehicle and you itemize your deductions.  If you take the standard deduction (most people do), you will not see a tax deduction for this fee.  If you do itemize, you will enter it in the section "Cars and Other Things You Own" in Deductions & Credits and will see it as part of your property tax deductions on Schedule A. 

If the total of all of your state taxes exceeds $10,000, entering more won't increase the deduction. You may see this explanation appear: "You have now maxed out the federal $10,000 deduction for itemized state and local taxes. Any entries over the $10,000 limit won't impact your federal tax outcome, but may still benefit you on your state tax return. We'll include them automatically if this applies to you."

You can’t deduct the total amount of car registration fees you paid, only the portion of the fee that’s based on your vehicle’s value.  And, not all states have value-based registration fees. The states that do are listed at the links below, along with the deductible portion of your registration fee.

States with deductible car registration fees and which portion you're allowed to claim

States where you claim personal property tax in lieu of vehicle registration fees

Where you can find your car registration fees:

You can deduct either state income taxes or sales taxes, but not both.

TurboTax uses the IRS optional sales tax tables and adds any big-ticket purchases you entered into TurboTax to figure out your sales tax deduction amount. You would need to enter the combined total state and local sales tax rate in the Sales Tax section under Deductions and credits. TurboTax also asks you to enter any nontaxable income in that section for calculating your estimated sales tax paid.

TurboTax would use the income taxes if they were higher than your estimated sales tax.

See this article and this one for more information on this topic.