Tax reform legislation enacted by the Georgia General Assembly in 2012 created a new system for taxing motor vehicles registered in Georgia – and it goes into effect March 1.
“This is a major change for motor vehicle taxation,” tax commissioner Becky Carlan said. “All motor vehicle sales will be exempt from sales tax, but all (including individual-to-individual) sales will be subject to a new Title Ad Valorem Tax.”
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 that day ( March 1). The new system for taxing vehicles only applies when the ownership of 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 the title to their vehicle.
The TAVT will function very much like a sales tax. The beginning rate for the remainder of 2013 is 6½%. In 2014 the rate will increase to 6¾%. In 2015 the rate will increase to 7%.
Once this TAVT is paid on a vehicle purchase, that owner will not be subject to the annual ad valorem tax that is paid with their tag renewal. But each time the vehicle goes to a new owner (except for inheritances and immediate family member transfers) it will again be subject to TAVT.
Most Georgia motor vehicle owners will remain subject to ad valorem on their vehicles until they trade or buy a new vehicle. If a vehicle was purchased between January 1, 2012, and February 28, 2013, an owner can take advantage of an opt-in provision. If sales tax was paid at the time of purchase most owners will qualify without additional cost. If no sales tax was paid at the time of purchase the owner may elect to pay the TAVT and then pay no ad valorem going forward at renewal time.
New residents will have the addition of TAVT to their title and tag fees at initial registration in the state. These folks will have the option of paying 50 percent at the time of the application for title and the balance within 12 months. The title will not be issued until the balance is paid.
Certain disabled veterans, former POW’s, Purple Heart recipients, and a few others that are currently exempt from ad valorem will continue to be exempt from TAVT. Trucks registered under IRP will not be subject to TAVT.
Carlan will have an open house on March 12 from 5:30 p.m. – 7:30 p.m. to allow anyone to come into the office to ask questions they have regarding the new TAVT.
“There is no need to rush into the office on March 1, unless you have a birthday the first part of March,” Carlan said. “If you did purchase a vehicle between the dates of January 1, 2012 – February 28, 2013, you will receive a letter regarding the opt-in option prior to your birthday.”