Big tax change coming when you buy a new or used vehicle

Birthday tax to disappear on vehicles purchased after March 1

How — and when — you pay the ad valorem tax on your personal car or truck is about to change for some people, big time. How big a change will depend on when you bought your new or used car.

A new law that changes the way motor vehicles are taxed in Georgia will go into effect on March 1, 2013, according to the Georgia Department of Revenue.

Motor vehicles purchased on or after March 1, 2013 and titled in this state will be exempt from sales and use tax and the annual ad valorem tax, also known as the “birthday tax,” says GDR.

Yes, you read correctly: No more sales tax charged when you buy a car or truck. No more use tax.

However, before you start celebrating, there's this catch: These taxes now will be replaced by a one-time tax that is imposed at the time the vehicle is titled on the fair market value of the vehicle, called the title ad valorem tax (“TAVT”).

For the first year of the TAVT, the rate will be 6.5 percent of the fair market value as identified by the Georgia Motor Vehicle Assessment Manual.

The TAVT is applicable to dealer and casual, person to person sales but excludes non-titled vehicles such as trailers and other non-motorized vehicles which will remain subject to ad valorem tax, the GDR says.

Vehicles owned prior to Jan. 1, 2012 will stay in the old system and owners can expect to owe the annual ad valorem tax on their birthday, just like always.

But suppose you bought your vehicle — new or used — sometime last year or earlier this year. You have a decision to make.

The period between Jan. 1, 2012 and Feb. 28, 2013 is considered an opt-in period. Vehicles purchased during this period may opt-in to the new TAVT system or they can stay in the annual ad valorem system.

The Georgia Department of Revenue’s website (www.newtitletax.com) provides a TAVT calculator that will help owners decide which option is best for them.

But be forewarned: You will need your vehicle’s VIN number to plug in and operate the online calculators.

Owners who choose to opt-in to the TAVT system will need to go to their local county tag office at any time between March 1, 2013 and Dec. 31, 2013 to do so.

One question you may have is this: “Where do I apply for my title and pay the TAVT?”

According to the department’s website here are the answers:

• The application for title and TAVT payment must be submitted to the county in which the purchaser registers the vehicle (i.e., county of residence). The TAVT must be paid at the time application for title and registration are made.

• If you purchase your vehicle at a dealership, the dealer will accept the application for title and TAVT payment on your behalf and deliver the title application and TAVT payment to your county tag agent.

Another question: “If I pay the TAVT do I still have to register my vehicle every year and pay the $20 renewal fee? What other fees still apply?”

• You are still required to annually register your vehicle in your home county and pay the associated $20 renewal fee. The existing $18 title application fee still applies when the vehicle is titled. You must continue to maintain liability insurance as required by Georgia law. If you live in one of the 13 emissions counties, the annual emissions test is still required prior to registration.

To view frequently asked questions concerning the new TAVT system or to use the calculator, visit the Georgia Department of Revenue website www.newtitletax.com.