Changes to the Motor Vehicle Ad Valorem Tax and Title Fee

This week we will take an in depth look at coming changes to the way motor vehicles are taxed as we continue our review of HB 386, the “comprehensive” tax reform bill we passed this year.  This portion of the bill has probably been misrepresented more than any other part of the bill.

Currently when you buy a vehicle, you pay sales tax on the price of the vehicle at the time of purchase (6-8% depending on the county the vehicle is titled in) as well as an ad valorem tax (determined by your County Tax Commissioner) each year on your birthday when you renew your license or car tag.  Under the provisions in HB 386, you will no longer pay sales tax or ad valorem tax on the newly purchased vehicle.  Instead, you will pay a one-time title fee that in most cases is less that you would have paid in sales tax alone.  Here are the details:

If you purchase a new or used vehicle,

Prior to January 1, 2012:

  • You will continue to pay the ad valorem tax each year on your birthday.

Between January 1, 2012 and February 28, 2013:

  • You can opt into the program until March 1, 2013 if the combined sales tax and ad valorem tax paid on the vehicle before March 1, 2013 is found to be equal to or greater than what the 6.5% title fee would be.  If the combined sales tax and ad valorem tax paid on the vehicle before March 1, 2013 is found to be less than what the 6.5% title fee would be, you may pay the difference between the two amounts and opt into the program as well.
  • The Georgia Department of Revenue is in the process of drafting regulations governing the exact process; however, election for the opt-in can be made at the time of purchase, or it can be made post-purchase with the owner going to the local tag office to make the necessary payments to elect the opt-in so that his/her new vehicle will no longer be subject to the “birthday tax.”  Once again, only new and used vehicle purchases made between January 1, 2012 and February 28, 2013, are eligible for this option.

After March 1, 2013:

  • The annual ad valorem, also known as “birthday tax,” and sales tax on the vehicle at the time of purchase will be eliminated with new and used vehicle purchases beginning March 1, 2013.
  • To replace this, you will be charged a one-time title fee of 6.5% beginning March 1, 2013.  The fee will go up to 6.75% on January 1, 2014 and then top out at 7% on January 1, 2015.

If you engage in a casual sale of a vehicle,

After March 1, 2013:

  • You will be required to pay the same title fee for casual sales unless the vehicle is sold to an immediate family member (spouse, parent, child, sibling, grandparent, or grandchild).
  • If sold or given away to an immediate family member, there is no title fee.  However, for transfers between family members there is a minimal title transfer fee of ¼ of 1% of the value of the vehicle that will be collected by both the state and the local county.

It is a pleasure and honor to serve you in the State Senate.  Limited taxation is a necessary burden of government.  I am always on the look out for sensible ways to lower the tax burden on our taxpayers.  If you have suggestions for improvements to the way taxes are applied and collected, I want to hear from you. Your livelihood and ability to support your family and enjoy the benefits of your labor are important to me and for the success for this nation.

Monday is Memorial Day and I will write about those who have given their lives for this great nation before returning to our discussion on the provisions of HB 386.

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  • © 2012 by
    Senator Bill Heath

    301 Coverdell Legislative
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