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Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts

taxes

Boat and Boat Motor Taxes

The retail sales of boats and boat motors are subject to either

Boat trailers are subject to motor vehicle sales and use tax.

Because different taxes apply to boats and boat trailers, the seller should always separate the sales price of these items on the sales invoice.

Boat and Boat Motor Sales and Use Tax

The boat and boat motor sales and use tax applies to the purchase of a boat that is 115 feet or shorter in length, measured in a straight line from the tip of the bow to the stern.

This includes each of the following:

  • motorboats
  • sailboats
  • motorized personal watercraft

Boat motors subject to boat and boat motor sales and use tax include the following:

  • outboard motors (gasoline or diesel)
  • an electric motor attached to a boat subject to boat tax, and sold with the boat for one price (such as a trolling motor)

The boat and boat motor sales and use tax rate is 6.25 percent. The tax is based on the sale price less any allowance for the trade-in of another boat or boat motor. The total amount of boat sales tax collected on each sale of a taxable boat or boat motor may not exceed $18,750.

For example, a person purchases a boat for $350,000. The boat comes with two outboard motors that are valued at $9,000 per motor. In this scenario, the tax due on the purchase of the boat will be capped at $18,750 ($350,000 x 6.25 percent = $21,875). The purchaser, however, is also required to pay an additional $562.50 in tax on the purchase of each of the two outboard motors included in the sale for a total of $1,125. The total tax collected in this example is $19,875 ($18,750 plus $1,125 = $19,875).

Permitted dealers collect the tax at the time of sale and remit it to the Texas Parks and Wildlife Department (TPWD) or the County Tax Assessor-Collector’s Office (CTAC). If the seller does not collect the tax, the buyer must pay the tax when obtaining the boat’s title and registration from the TPWD or participating CTAC.

Out-of-State and New Resident Purchases

A Texas resident who buys a boat or boat motor in another state and brings it into Texas owes the 6.25 percent boat and boat motor use tax. The buyer can receive credit for tax legally due and paid in another state for a boat or boat motor brought into Texas when titling and registering the boat.

Use tax is due on a taxable boat or boat motor purchased in another state and brought into Texas within 45 working days after it is delivered to the purchaser or brought into Texas for use. Boat use tax is 6.25 percent. There is no limit to the amount of use tax due on the use of a taxable boat or boat motor in this state.

A new Texas resident who brings a boat or boat motor into Texas qualifies to pay a $15 new resident tax instead of the 6.25 percent boat and boat motor use tax.

The buyer pays the use tax or new resident tax when obtaining the boat’s title and registration from the TPWD or participating CTAC.

Boat and Boat Motor Sales and Use Tax Exemptions

The following entities can buy boats and boat motors tax free:

  • volunteer fire departments
  • the federal government
  • Texas state agencies
  • Texas cities
  • Texas counties
  • other Texas political subdivisions
Exemption for Boats and Boat Motors Sold for Use in Another State

An individual can buy a boat or boat motor tax-free if

  • the boat or boat motor is removed from this state within 10 days of purchase;
  • the boat or boat motor is placed in a permitted repair facility for repairs or modifications within 10 days of purchase and removed from this state within 20 days of completion of the repairs or modifications; or
  • the individual purchases a temporary use permit, and the boat or boat motor is removed from this state within 90 days of purchase.
Temporary Use Permit

An individual can purchase a temporary use permit (PDF) allowing exempt use in Texas of a taxable boat or boat motor purchased outside of Texas. The fee for the permit is $150 for each boat or boat motor used in this state and is valid for 90 days.

For example, if someone from another state brings their boat into Texas for a fishing tournament, and the boat has two outboard motors, they would need to purchase a temporary use permit for the boat (1 x $150), and one permit for each outboard motor (2 x $150) for a total of $450.

Only two temporary use permits may be issued for the same taxable boat or taxable outboard motor within a calendar year. The second permit in a calendar year may not be issued before the 30th day after the date the first permit expires. Texas Parks and Wildlife issues the temporary use permits.

Limited Sales and Use Tax

Limited sales and use tax applies to the purchase of a boat that is greater than 115 feet long measured from the tip of the bow in a straight line to the stern.

Limited sales and use tax also applies to boats designed to be propelled by a paddle, oar or pole, such as the following:

  • canoes
  • kayaks
  • inflatable boats and rafts
  • punts

In addition, limited sales and use tax applies to the following transactions:

  • renting or leasing boats or boat motors
  • sales of electric motors and accessories, such as life jackets or ladders, sold separately from the boat
  • repairing and remodeling boats and boat motors

The limited sales and use tax rate is 6.25 percent state tax, plus any applicable local tax up to 2 percent. If the seller has a Texas sales and use tax permit, the seller collects the tax at the time of sale and remits it to the Comptroller’s office.

If the seller does not collect the tax, the buyer must pay the tax to the Comptroller’s office using Form 01-156, Texas Use Tax Return (PDF). If the buyer has a Texas sales and use tax permit, the buyer can pay it on their next sales and use tax return.

Limited Sales and Use Tax Exemptions

The sale, by the builder, of a ship of eight or more tons of fresh water displacement and used exclusively and directly in a commercial enterprise that is not subject to the boat and boat motor sales and use tax is exempt from limited sales and use tax.

The sale of the following items is exempt when purchased to be used on a ship or vessel of eight or more tons of fresh water displacement and used exclusively and directly in a commercial enterprise, including boats subject to the boat and boat motor sales and use tax:

  • materials, equipment and machinery that become component parts of the ship or vessel (including commercial fishing and pleasure fishing). Examples include fuel filters, batteries, fire extinguishers, life jackets and towing gear.
  • materials and labor used in repairing, renovating or converting the ship or vessel.

The sale of the following items is exempt when purchased for use on a ship or vessel operating exclusively in foreign or interstate coastal commerce:

  • materials and supplies purchased by the ship or vessel owner or operator that become component parts of the vessel or are used in its maintenance and operation
  • materials and supplies purchased by a person providing stevedoring services when loaded aboard the vessel and not removed before its departure

To claim the exemption when buying qualifying items, the buyer must provide the seller a properly completed Form 01-339, Texas Sales and Use Tax Exemption Certificate (PDF).

Penalties and Interest

Penalties
  • If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed.
  • If tax is paid over 30 days after the due date, a 10 percent penalty is assessed.
Interest
  • Past due taxes are charged interest beginning 61 days after the due date.
  • To calculate interest on past due taxes, visit Interest Owed and Earned.

Additional Resources

HB855 Browser Statement

In 2015, the Texas Legislature passed House Bill 855, which requires state agencies to publish a list of the three most commonly used Web browsers on their websites. The Texas Comptroller’s most commonly used Web browsers are Google Chrome, Microsoft Internet Explorer and Apple Safari.

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