Motor Vehicle Tax Guidebook 2011 - Texas Comptroller of Public ...

Section II
Tax Rates and Types
Tax Rates
• Current Tax Rate
• Prior Tax Rates
Current Tax Rate
The current motor vehicle tax rate is 6.25 percent. The
tax due on a motor vehicle, however, is calculated at
the rate in effect on the date the owner purchased the
motor vehicle in Texas or the date it was first brought
into Texas.
Prior Tax Rates
The motor vehicle sales and use tax rate began in 1941
at 1 percent. The Texas Legislature has increased the
rate in subsequent years until 1991, the last year for a
rate change. Historical rates are as follows:
Date
Tax Rate
05/1/41 — 02/28/50 1.00 %
03/1/50 — 08/31/59 1.10 %
09/1/59 — 06/30/63 1.50 %
07/1/63 — 09/30/68 2.00 %
10/1/68 — 06/30/71 3.00 %
07/1/71 — 07/31/84 4.00 %
08/1/84 — 08/31/87 5.00 %
09/1/87 — 08/31/91 6.00 %
09/1/91 — Present 6.25 %
Motor Vehicle Sales Tax
• Tax Responsibility
• Not a Retail Sale
• Trade-In Allowance
• Calculating Sales Tax on Purchases from
Licensed Dealer
• Limited Sales Tax – Direct Pay; Occasional Sales
Tax Responsibility
Motor vehicle sales tax is due on the Texas retail sale
of a motor vehicle. A motor vehicle sale includes
installment and credit sales and exchanges for property,
services or money. A transfer of a motor vehicle without
payment of consideration that does not qualify as a gift
is a retail sale and is subject to the 6.25 percent motor
vehicle tax.
The motor vehicle sales tax is the purchaser’s
responsibility. If the seller is not a licensed dealer, the
purchaser is responsible for titling and registering the
vehicle, as well as paying the tax to the county TAC
within 20 county working days of the purchase date.
Active duty military have 60 county working days to
title and register a vehicle. Tax is not due until that
time.
The seller will collect the tax if the seller is a dealer
licensed by TxDMV and the motor vehicle’s gross
weight is 11,000 pounds or less. The seller is
responsible for remitting the tax to the county TAC at
the time of titling and registration.
A licensed dealer has no collection responsibility when
the motor vehicle’s gross weight is more than 11,000
pounds or when the motor vehicle is a non-titled
trailer. The purchaser of these vehicles is responsible
for remitting the tax to the county TAC at the time of
titling and registration.
The state will not hold a purchaser who properly paid
the tax to the selling dealer liable for any tax due if
the dealer fails to transfer title and submit the tax. The
purchaser must provide to the county TAC acceptable
documents which show the purchaser paid the tax to
the dealer. Acceptable documents include a dealer’s
invoice or sales contract that itemizes the tax paid to
the dealer.
Not a Retail Sale
Tax Code Section 152.001(2) provides that a retail
sale does not include the purchases of (A) new motor
vehicles by a licensed dealer franchised to resell that
type of vehicle, (B) used motor vehicles by a licensed
dealer for resale purposes and (C) new motor vehicles
by a licensed franchised dealer for a lease contract.
If a licensed dealer acquires a motor vehicle and
operates it only with a dealer plate in accordance with
Transportation Code Chapter 503, a taxable retail sale
has not occurred.
Motor Vehicle Tax Guidebook
II-1