California license fee income tax deduction

As a result, vehicles with higher current values will provide more revenues than vehicles with lower values. In considering tax proposals, it is always helpful to know the "incidence" or burden of a particular tax. This is usually done by showing the tax paid as a percentage of household income, across income groups. Unfortunately, data limitations prevent a thorough examination of this relationship between income and VLF paid. However, two data sources do exist that provide some insight into the relationship.

First, for Californians who itemize on their personal income tax forms, the VLF is tax-deductible on the personal property tax line on their tax forms. As a result, income tax returns provide information on VLF paid, but only for those taxpayers taking advantage of the tax deduction. Second, the U. Census Consumer Expenditure Survey collects vehicle expenditure data by income group on a national basis. While acknowledging the less-than-perfect data, our review of these two sources does allow us to draw the following conclusions:.

Each owner's fee would therefore be cut in half. Then, beginning January 1, , the rate would be halved again--to 0. The Governor proposes to hold local governments and realignment "harmless" from the tax reduction by using General Fund revenues to backfill the foregone VLF revenues. The funds to repay local governments would be continuously appropriated and would not need to be approved in the annual budget process.

A similar proposal is contained in SB , [Haynes]. The phase-in of this tax reduction would use an exemption on vehicle purchase price. Assembly Bill proposes to reimburse local governments for all lost revenues by using the state's sales tax revenues.

Once the VLF was eliminated, the DMV would continue to calculate the amount of revenues that would have been collectedin order to accurately replace foregone local revenues.

On new vehicles, the tax is adjusted downward each year for eleven years. For tax purposes, always use the most recent license fee you paid. Do not carry over the same amount from year to year. Not all California DMV fees 1 are deductible. A quick glance at your registration invoice will tell you that California lists multiple fees on the bill for vehicle registration. When preparing your federal income tax return identify the license fee only.

Created in by the California legislature in lieu of a property tax on vehicles, this is the portion that is based on the value of the vehicle and therefore the portion that is tax deductible. The licensing part of your California DMV registration fees is still deductible for the tax year. Additionally, starting Jan. Posted Thu, Mar 5, at am PT. So where is it, exactly, on your forms?

The DMV issued the following guidelines:. Find out what's happening in Fair Oaks-Carmichael with free, real-time updates from Patch.

Let's go! The vehicle license fee can be found on your: Vehicle Registration Renewal Notice Validated Registration Card Your annual vehicle registration payment consists of various fees that apply to your vehicle. A former theater, dance and music critic for such publications as the "Oakland Tribune" and Gannett Newspapers, she started her Web-writing career during the dot-com heyday. O'Neal also translates and edits French and Spanish.

Her strongest interests are the performing arts, design, food, health, personal finance and personal growth. Share It. Deduct this fee as a personal property tax deduction on Schedule A of Form Florida Highway Safety and Motor Vehicles. Ohio Bureau of Motor Vehicles.