I bought 2 new vehicles in MN in 2025, total registration fees were $13,200, 'sales tax' made up $10,500 of this. When entering car registration fees, which # do i use?

[Vanessa A · Accepted solution]

Sales tax is not part of car registration fees. Since you have the sales forms, you can use this link to determine exactly how much your registration was versus your sales tax. 

Since you did buy these in 2025, you may be eligible for a couple of other deductions or credits on your federal return.  

The first is the Car loan interest deduction. In order to claim this interest the following criteria must be met:

• The car was purchased not leased
• Final assembly occurred in the US
• It is NOT a business use, but was purchased for personal use
• It has a GVWR of less than 14,000lbs (car, truck, SUV, mini van or motorcycle)
• Loan was originated in 2025 and must be secured by a lien on the vehicle or the title
• Your income must be less than $100,000 if single or $200,000 if married filing jointly to receive the full deduction. 
•  If your income is over $150,000 if single or $250,000 if Married filing jointly, you are not eligible

Note:  The interest deduction is capped at $10,000.  This is an above the line deduction, not a credit meaning it will lower your AGI and taxable income.  It will not be an amount that is refunded to you, but it could result in a refund by lowering your taxable income.  

You can enter your car loan interest by selecting the following:

1. Deductions and credits
2. Cars and Other things you own
3. Start next to Car Loan Interest
4. You will need to enter the VIN and information from the lender
    

And if either of them were an EV purchased prior to Oct  2025, you may be eligible for the EV credit.

 If eligible, you will get credit for it on  your 2025 taxes filed in 2026. In order to receive credit for the EV on your 2025 return, you would need to have bought  it prior to September 30, 2025 as the credit was terminated after that date. 

Things to remember about this credit: 

• It is worth UP to $7,500 depending on the vehicle you purchase. The credit varies per vehicle 
• It is a nonrefundable credit. This means it will reduce your tax liability by up to $7,500 but will not result in a  negative number or a tax refund of money you did not pay in or have withheld. 
• The credit cannot be carried forward 
• You can use your income for the year you take delivery or the prior year if your income in the previous year was  below the threshold if it is above the threshold in the current year. 
•  In order to qualify your AGI must be less than: 

                             $300,000 if Married Filing Joint 

                          ○ $225,000 if Head of Household 

                          ○ $150,000 if single or Married Filing Separate 

• Vehicle Qualifications are as follows: 

○ Vans, SUVS, and Pickup Trucks my have an MSRP of no more than $80,000 

○ Other vehicles must have an MSRP of no more than $55,000 

The MSRP does not include destination charges, options added by the deal (seal coating, extended  

▪warranty, etc.) taxes, fees, or manufacturer discounts or incentives. Basically, it does not matter if you  strike a good deal on the vehicle if the Manufacturer says it is worth more than the limit, it does not  qualify. 

○ Final Assembly must be in North America 

○ Click here to enter your VIN to see if your vehicle qualifies 

This credit is reported on form 8936 (Clean Vehicles Credits) and flows to Schedule 3 Line 6 which then flows to line 19 of your Form 1040