Why Cut Vehicle License Fees? At Least They’re a Tax Write-Off

The budget deal between Gov. Jerry Brown and the Democratic majority Legislature being approved by lawmakers beginning June 28 includes a $12 increase in the registration fees paid on the state’s nearly 32 million vehicles.

The current registration fee is $31.

California drivers – the Department of Motor Vehicles says there are almost 24 million — pay annual registration fees that vary based on the age and purchase price of the vehicle.

A portion of the amount paid for annual registration renewal includes vehicle license fees, which fall from 1.15 percent of a car’s value to .65 percent, beginning July 1.

Brown has sought since January to keep the vehicle license fees, which are deductible on federal taxes, at the 1.15 percent rate for five years.

Republican lawmakers refused to provide the votes needed to put the issue before voters, as Brown wanted.

The increased registration fees, which are not deductible, are expected to generate $300 million, which will be used to help pay for the budget’s shift of responsibility for parole and non-violent prison inmates to counties.

The DMV offers vehicle owners a calculator to estimate their registration.

A car in Sacramento County that cost $36,000 when purchased in June 2003 would currently pay a $28 registration fee.

That will climb to $40 under the budget.

The tax-deductible vehicle license fees are $235.

A $50,000 2010 model car in Santa Monica would see its registration fee climb from $31 to $43. Its vehicle license fees are estimated to be $576.

The calculation is different for vehicles of non-California residents.

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