Motor Vehicle Taxes
Frequently Asked Questions
- Where do I transfer title to my vehicle and pay any taxes due?
- Transfer of titles and tax collection is done through the local County Tax Assessor-Collector's office.
- What is the motor vehicle tax rate?
- The rate is 6 1/4 percent and is calculated on the purchase price of the vehicle. The taxable value of private-party purchases of used motor vehicles may be based on the Standard Presumptive Value.
- Will a trade-in reduce the taxable value
- The value of a motor vehicle received by the seller as consideration on the purchase of another motor vehicle reduces the taxable value of the purchase.
- Are churches exempt from the motor vehicle tax?
- Yes, if the vehicle being purchased is designed to carry more than 6 passengers and is used primarily to provide transportation to and from church or religious services or meetings. For additional information see motor vehicle sales tax rule 3.82.
- Is a truck used on a farm tax exempt?
No, a standard pick-up truck does not qualify for exemption from Texas motor vehicle tax, even though it may be operated with farm plates. Texas law does not provide a blanket agricultural exemption from motor vehicle tax.
Certain vehicles modified to distribute feed or fertilizer may however qualify for exemption as a “farm machine”. Farm machine is defined in the motor vehicle tax law as “a self-propelled motor vehicle specially adapted for use in the production of crops or rearing of livestock, including poultry, and use in feedlots and includes a self-propelled motor vehicle specially adapted for applying plant food materials, agricultural chemicals, or feed for livestock. Farm machine does not include any self-propelled motor vehicle specifically designed or specially adapted for the sole purpose of transporting agricultural products, plant food materials, agricultural chemicals, or feed for livestock.” Farm machines, trailers and semi-trailers that are used primarily for farming and ranching, including the raising of poultry and operation of feedlots, are exempt from motor vehicle tax. See Tax Code Sec. 152.091. “Primarily” means at least 80 percent of the operating time. Other motor vehicles operated on a farm or ranch are subject to motor vehicle tax, even if they display farm plates.
Beginning Jan. 1, 2012, a person claiming an exemption from motor vehicle sales tax on the purchase of qualifying vehicles must provide an AgTimber number issued by the Comptroller of Public Accounts on the documentation issued by the purchaser to substantiate the claim for exemption. AgTimber numbers consist of 11-digits and begin with a “1” or “3”. The exemption is claimed on Form 130-U, Application for Certificate of Title, in Section 21, when purchasing or registering qualifying farm machines, trailers and semi-trailers. (Updated 02/06/12)
- I just bought a new livestock trailer. Is it taxable?
Trailers and semi-trailers used primarily on a farm or ranch in the production of food for human consumption, grass, feed for any form of animal life, or other livestock or agricultural products to be sold qualify for exemption from Texas motor vehicle tax. A farm trailer primarily used by a farmer or rancher in processing, packing or marketing of the farmer’s own livestock or agricultural products also qualifies for exemption. See Rule 3.72 for more information.
- “Farm or ranch” includes poultry operations and feedlots.
- “Primarily” means the trailer is used at least 80 percent of the time on the farm, ranch or poultry operation, directly in the production of agricultural products in the regular course of business.
A trailer that is not used primarily in an exempt manner is taxable. For example, a horse trailer with sleeping quarters for humans is not exempt, nor is any trailer used for transporting horses to and from competitions or shows.
Beginning Jan. 1, 2012, a person claiming an exemption from motor vehicle sales tax on the purchase of qualifying vehicles must provide an AgTimber number issued by the Comptroller of Public Accounts on the documentation issued by the purchaser to substantiate the claim for exemption. AgTimber numbers consist of 11-digits and begin with a “1” or “3”. The exemption is claimed on Form 130-U, Application for Certificate of Title, in Section 21, when purchasing or registering qualifying farm trailers and semi-trailers. (added 02/06/12)
- I am in the military. Can I purchase a vehicle tax free?
- United States and most foreign military personnel are subject to the motor vehicle sales and use tax. However, foreign military personnel, their dependents, and military-employed civilians attached to NATO are exempt from the sales and use tax on motor vehicles. For additional information see motor vehicle sales tax rule 3.68.
- Who is eligible to pay the $10 gift tax on the gift of a motor vehicle?
Effective Sept. 1, 2009, the only transactions that qualify to be taxed as gifts ($10) are those where the vehicles are received from a:
- parent or stepparent*
- grandparent or grandchild*
- child or stepchild*
- decedent's estate
A vehicle also qualifies to be taxed as a gift when it is donated to, or given by, a nonprofit service organization qualifying under the Internal Revenue Code, Section 501(c)(3). All other motor vehicle transfers made without payment are defined as sales and are subject to tax calculated on the standard presumptive value (SPV) of the vehicle as determined through the Registration and Title System (RTS).
Both the vehicle donor and recipient must complete an Affidavit of Motor Vehicle Gift Transfer (Form 14-317), which describes the transaction and the relationship between the parties. The affidavit must be notarized by a public notary of Texas or another state, or witnessed by an authorized employee of a Texas county tax assessor-collector's office. The affidavit must be provided to the county tax assessor-collector along with the Application for Certificate of Title (Form 130-U) when the vehicle is registered in the new owner's name.
- I am leasing a vehicle in Texas, do I owe tax?
- A motor vehicle purchased in Texas to be leased is subject to motor vehicle sales tax. The lessor is responsible for the tax and it is paid when the vehicle is registered at the local County Tax Assessor-Collector's office. The lease contract is not subject to tax. See motor vehicle sales tax rule 3.70 for additional information.
- Do I owe tax if I bring a leased motor vehicle into Texas from another state?
- When a vehicle is leased in another state and the lessee brings it to Texas for public highway use, the lessee (as the operator) owes motor vehicle use tax based on the price the lessor paid for the vehicle. The standard tax rate is 6 1/4%. Credit will be given for any tax the lessor or the lessee paid to another state. See motor vehicle sales tax rule 3.70 for additional information.
- Where do I get a handicapped sticker for my vehicle?
- You can obtain the application through the local County Tax Assessor-Collector's office.
- What is the surcharge on diesel-powered on-road motor vehicles?
- The surcharge on the purchase of diesel-powered, on-road motor vehicles with a gross vehicle registered weight exceeding 14,000 pounds applies to both new and used vehicles and to motor vehicles purchased inside or outside Texas. The surcharge also applies to a vehicle that is brought into Texas by a new resident in the same manner as a vehicle purchased in Texas. The rate for model years 1996 and earlier is 2.5 percent of the purchase price of the vehicle, while the rate for model years 1997 and later is 1 percent. The surcharge is paid to the county tax assessor collector and administered in the same manner as the motor vehicle sales tax.
- What is the new requirements for dealers on the purchase on a motor vehicle by a person who is orthopedically handicapped?
- Beginning Jan. 1, 2010, a dealer selling a motor vehicle may not collect motor vehicle sales tax when a purchaser claims an exemption for an orthopedically handicapped person when the purchaser signs a properly completed Form 14-318, Exemption for Orthopedically Handicapped Person, at the time of the sale.
To establish qualification for the exemption, the purchaser must complete all information requested on the exemption certificate and provide any applicable supporting documentation (as required by Rule 3.84) at the time of the sale. Exemption certificates must be retained by the selling dealer. The exemption certificate is available on our Texas Motor Vehicle Tax Forms Web page. (added 12/18/09)