Question

Is car registration tax deductible in Arizona?

Yes, a portion of your car registration in Arizona is tax deductible. It is the Vehicle License Tax, which is tax deductible in Arizona.

The Vehicle License Tax (VLT), which is a value-based tax paid annually, makes up a portion of your car registration fees. This cost is based on the value of your car. In Arizona, the Vehicle License Tax is deductible.  

So, you are charged with the VLT every time you register or renew your car. However, the state doesn’t charge you the full price. Instead, they charge 60% of the vehicle’s original base retail price, and what is obtained after calculating that becomes the taxable value. 

At every car registration renewal in Arizona, the taxable value is reduced by 16.25%, incorporating the depreciation. This value is broken down as $100 units and is charged at a specific rate per $100 unit. The rates currently stand at $2.80 per $100 for new vehicles, $2.89 for used, and $4 for alternative fuel vehicles.