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Does Florida have property tax on cars?

Do You Have to Pay a Vehicle Tax? Here’s Some Good News

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More than half of the states in the U.S. charge personal property tax on vehicles, but the news isn’t all bad.

About half of the states in the U.S. — 27, to be exact — charge a personal property tax on vehicle ownership, based on the current value of your vehicle. The average cost is $423 per year. Here’s how to determine where your state ranks, and some tidbits of good news for those who have to pay.

Where does your state rank?
New York, New Jersey, Texas, and Florida are a few of the states that don’t charge a vehicle property tax at all. On the other end of the spectrum, it can be rather expensive to own a vehicle in many states. The most expensive vehicle taxes are in Rhode Island, where the average driver pays $1,133 per year. Other expensive states include Virginia ($962 on average), Kansas ($905), Mississippi ($743), and Connecticut ($630).

Miniature car next to stack of coins and calculator

Image source: Getty Images.

Some states charge vehicle taxes, but in modest amounts. For example, Montana drivers pay only $85 per year on average for vehicle property taxes. Here’s a useful infographic from Wallet Hub that can show you where your state stands, as well as the link to the full list of average taxes.

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Good news No. 1: It’s tax-deductible
The first bit of good news is that the IRS allows you to deduct personal property taxes that are based on the value of the underlying property, and this includes taxes paid on vehicles.

However, not all vehicle taxes are completely based on the value of the underlying vehicle. Many states also charge a fixed annual registration fee or other charges. It’s important that you deduct only the portion of the tax that’s based on the vehicle’s value (known as the ad valorem tax).

Good news No. 2: It’ll go down next year
Since vehicle taxes are based on the resale value of your car, they tend to go down each year as your vehicle depreciates in value. Some cars lose value faster than others, so there’s no set guideline to determine how much your tax bill might go down next year, but you should definitely notice a decrease unless your local tax rates have risen.

Many states also offer exemptions or discounts for certain things, such as high-mileage vehicles. These vary widely by state, so consult your local taxing authority to see if you might qualify for any discounts.

Good news No. 3: Your money goes to good causes
Nobody likes paying taxes — well, at least nobody I’ve met. However, there is a certain sense of satisfaction when your money funds some worthwhile programs and services.

The breakdown of how your vehicle tax is spent depends on where you live. Most places will send you an itemized tax bill every year that includes such public programs as police, fire departments, libraries, recreational programs and facilities, community colleges, public schools, and more.

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To give you an idea of where your taxes might be going, here is an actual itemized vehicle tax bill.

Consider the big picture
Many of the states that charge vehicle taxes assess lower tax rates for other things, and vice versa.

For example, at $416 per year, South Carolina has the ninth-highest vehicle tax rate in the country. However, residents of the state pay the fifth-lowest property tax bills on their homes.

On the other hand, New Jersey has the highest real estate taxes in the U.S., but it doesn’t charge its residents a dime for vehicle taxes.

Some states are simply tax-friendly places to live. Delaware has the fourth lowest real estate taxes, no vehicle taxes, and no state sales tax.

The point here is that you shouldn’t pay as much attention to individual taxes as you do to the big picture. Just because your state has a high vehicle tax doesn’t mean your overall tax burden would necessarily be lower if you moved elsewhere, and maybe your state uses those tax dollars to your benefit in ways other states don’t.

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Vehicles brought into Washington from out-of-state

If you are a Washington resident and purchase a vehicle outside this state that you then bring into Washington, you owe use tax on the value of that vehicle. Use tax is the same rate as sales tax and is due when property is brought into Washington if sales tax was not paid. The use tax rate is determined by your place of residence.

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You must pay use tax when you license/register your vehicle. If you can show that you paid sales or use tax in another state prior to bringing it into Washington, you may apply the amount of sales or use tax you paid against the Washington use tax you owe (RCW 82.12.035). You may not take a credit for other amounts paid such as licensing fees, lessor taxes, or value added taxes like Canada’s GST.

Note: You are considered a resident of this state for sales and use tax purposes if you take actions which indicate you intend to live in this state on more than a temporary or transient basis. See our Washington State residency definition tax topic.

Moving to Washington new residents

  • If you acquired and used a «private motor vehicle» in another state more than 90 daysbefore moving here, you do not owe Washington’s use tax (RCW 82.12.0251(3)).

Note: A «private motor vehicle» is an individually owned motor vehicle, for personal use, and not a commercial vehicle. Off road vehicles (ORVs), motor homes, and trailers do not qualify for this exemption. ORVs are vehicles not designed primarily for use upon the public streets and highways. (RCW 46.04.365)

Registration of the vehicle in another state is commonly used as documentation for this exemption.

If you purchased a personal vehicle in another state within 90 days of moving here, you owe use tax when you register and license it.

Licensing requirements

You must license your vehicle in Washington within 30 days of moving to this state. For more information, visit the Department of Licensing website.

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Military personnel vehicles

For information on the taxability of vehicles purchased or used in Washington by military personnel, see our Vehicle Sales Tax and Use Tax Requirements for Persons in the Military Services Special Notice.

Commercial vehicles

If you bring a commercial vehicle into this state, use tax is due on the value of the vehicle, no matter how long ago you purchased it. However, if a commercial vehicle is brought into the state by a business that operates outside of Washington for temporary (no more than 180 days in any consecutive 365 days) business use, then use tax is determined on the reasonable rental value. See (RCW 82.12.010(7)(c)).

Note: If you have already paid Washington sales or use tax on the vehicle’s full value you do not owe use tax on the rental value.

Licensing requirements

You must license your vehicle in Washington within 30 days of moving to this state. For more information, visit the Department of Licensing web site.

What amount is used to determine the use tax due?

Use tax is based on the fair market value of the vehicle. Generally, this is the amount paid to the seller. However, if the payment amount does not represent the value for vehicles of similar make, model, and condition, the value is determined as close as possible to the retail selling price of similar vehicles. The value of the vehicle cannot be less than the amount paid to the seller (RCW 82.12; WAC 458-20-17802).

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