Tax Question – Michigan Registration Renewal

Question: Where do I report the cost for renewing my tags with the State of Michigan?

Simple Answer:  The cost for renewing your your car registration is considered a tax on personal property.  Personal property tax is reported on Schedule A, Itemized Deductions, Line 7.

Complicated Answer:  State and local registration renewal fees are deductible as personal property taxes only if the fees are based on the value alone and are imposed on a yearly basis.  If the registration renewal fee is based on the value of the car and imposed yearly then it is considered a personal property tax.  If the registration renewal fee is based on the weight of the car then the fee is not considered a personal property tax.

According to the Michigan Secretary of State website, “For model years 1984 and newer, the vehicle registration is based on the manufacture’s suggested retail (or base) price (ad valorem).  Registrations for models 1983 or older are based on the vehicle’s weight.

So if your car is older than 1984 then you can not take a deduction for personal property taxes.

IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.