ATLANTA, Ga. (January 16,
2013) –
Tax reform legislation enacted by the Georgia General Assembly in 2012 created
a new system for taxing motor vehicles registered in Georgia. As a result, the annual vehicle ad
valorem tax, often called the “birthday tax,” will change to a state and local
title ad valorem tax on March 1, 2013. The Association County Commissioners of Georgia (ACCG) encourages
individuals who plan to purchase or transfer the title on a vehicle to learn
more about these changes before visiting their local county tag and title
office.
Beginning March 1, 2013, state and local sales tax will no longer apply
to the purchase of a motor vehicle (except for the 1% transportation tax on the
first $5,000 of any vehicle sale in regions that have this tax). All vehicles purchased or transferred
into ownership after this date also will no longer be subject to the annual ad
valorem tax. Instead, these vehicles will be subject to a new, one-time state
and local title ad valorem tax (TAVT) that is paid at the time owner registers
the vehicle and applies for the title with the county.
Have a question about the tax change? Check the Ad Velorem Tax FAQ’s.
the vehicle is transferred through a title exchange. All other vehicle owners will continue to operate under the
current system and pay the annual ad valorem taxes until they no longer hold
title to the vehicle.
vehicles. People need to fully
understand that the cost to title a vehicle is going to be higher than what
they may have previously experienced,” said ACCG Legislative Director Clint
Mueller. “The tradeoff is that
they will not have to pay a sales tax if they have traditionally purchased a
vehicle through a dealership and they will not have the annual ad valorem tax
to pay every year.
before a new title is issued and the vehicle is registered. The new title ad valorem tax is
calculated at a rate of 6.5% of the vehicle’s value, not the sales price, as
defined by the Department of Revenue’s motor vehicle ad valorem assessment
manual. When there is no value
available in the assessment manual, the bill of sale or a reputable used car
market guide determines the value. The trade-in value of another motor vehicle will be deducted from the
value to get the taxable value.
For example, consider an individual who purchases a vehicle with a fair
market value of $15,000. He or she
also receives $2,500 as the trade-in value for a previously owned vehicle. The title ad valorem tax that would be due
when the individual applies to have the title issued is $812. The Georgia Department of Revenue (DOR)
has developed a title ad valorem tax calculator to help people determine the
amount of taxes they will owe that is available at: http://onlinemvd.dor.ga.gov/Tap/welcome.aspx.
All vehicles purchased on or after March 1, 2013 are subject to this new
system, regardless of where the vehicle is purchased. Vehicles purchased through a private sale that were
previously exempt from sales tax, such as vehicles that are sold between individuals
and not through a dealer, will now be subject to the title ad valorem tax.
Following are other important changes that will go into effect on March
1, 2013:
· Vehicles transferred from another state to Georgia will be subject to
the title ad valorem tax in two installment payments, in addition to the title
and registration fees that they were responsible for in the past.
· Leased vehicles will still be subject to a use tax on the monthly lease
payment. The dealership is
responsible for paying the title ad valorem tax and may include this cost in
the term of the lease.
· Vehicle titles transferred between family members, including spouses,
parents, children, siblings, grandparents or grandchildren, will be handled as
follows:
o Vehicles owned prior to March
1, 2013: The family member who is titling the
vehicle has the option to pay the full title ad valorem tax or continue to pay
the annual ad valorem tax under the old system.
o Vehicles purchased on or
after March 1, 2013: The family member who is
titling the vehicle is subject to a 0.5% title ad valorem tax.
· Title applications must be processed in the county where the vehicle is
to be registered.
· Salvage vehicles and vehicles donated to charities will pay a reduced title
ad valorem tax at a rate of 1%.
· Certain veterans who were exempt from annual motor vehicle ad valorem
tax will also be exempt from the title ad valorem tax.
For more information on the new title ad valorem tax, go to www.etax.dor.ga.gov and click on “Motor Vehicles” and then the “Tax Calculator” button or www.accg.org and click on “Motor Vehicle Tax Reform.”
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The Association County Commissioners of
Georgia (ACCG) provides leadership enhancement, cost-efficient services and
public policy development and advocacy on behalf of Georgia’s county officials
and their local communities.
For more information on ACCG, go to www.accg.org.
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