taxes

Motor Vehicle Taxes Frequently Asked Questions

What is the motor vehicle tax rate?

The rate is 6.25 percent and is calculated on the purchase price of the vehicle. The taxable value of private-party purchases of used motor vehicles may be based on the standard presumptive value.

Will a trade-in reduce the taxable value?

Yes. The value of a motor vehicle a seller receives as consideration for the purchase of another motor vehicle reduces the taxable value of the purchase.

Are church vehicles exempt from motor vehicle tax?

Yes, if the vehicle being purchased is designed to carry more than six passengers and is used primarily (at least 80 percent of the time) to provide transportation to and from church or religious services or meetings. A vehicle registered as a passenger vehicle used primarily for the personal or official needs or duties of a minister is not exempt.

Is a truck used on a farm exempt from motor vehicle tax?

No, standard pickup trucks or other motor vehicles operated on a farm or ranch do not qualify for exemption from Texas motor vehicle tax, even though they may display farm plates. Texas law does not provide a blanket agricultural exemption from motor vehicle tax.

However, certain vehicles modified to distribute feed or fertilizer may qualify for exemption as a "farm machine." Motor vehicle tax law defines a farm machine as "a self-propelled motor vehicle specially adapted for use in the production of crops or rearing of livestock, including poultry, and use in feedlots and includes a self-propelled motor vehicle specially adapted for applying plant food materials, agricultural chemicals, or feed for livestock. Farm machine does not include any self-propelled motor vehicle specifically designed or specially adapted for the sole purpose of transporting agricultural products, plant food materials, agricultural chemicals, or feed for livestock." Farm machines, trailers and semi-trailers that are used primarily (at least 80 percent of the operating time) for farming and ranching, including the raising of poultry and operation of feedlots, are exempt from motor vehicle tax.

A person claiming an exemption from motor vehicle sales tax on the purchase of qualifying vehicles must provide an ag/timber number on Form 130-U, Application for Texas Title (PDF), when buying or registering qualifying farm machines, trailers and semi-trailers.

I just bought a new livestock trailer. Is it taxable?

Trailers and semi-trailers are exempt from Texas motor vehicle tax when they are used primarily on a farm or ranch in the production of food for human consumption, grass, feed for any form of animal life, or other livestock or agricultural products to be sold. A farm trailer that a farmer or rancher primarily uses to process, pack or market the farmer's own livestock or agricultural products also qualifies for exemption.

  • "Farm or ranch" includes poultry operations and feedlots.
  • "Primarily" means the trailer is used at least 80 percent of the time on the farm, ranch or poultry operation, directly in the production of agricultural products in the regular course of business.

A trailer that is not used primarily in an exempt manner is taxable. For example, a horse trailer with sleeping quarters for humans is not exempt, nor is any trailer used for transporting horses to and from competitions or shows.

A person claiming an exemption from motor vehicle sales tax on the purchase of qualifying vehicles must provide a Comptroller-issued ag/timber number on the documentation issued by the purchaser to substantiate the claim for exemption. The exemption is claimed on Form 130-U, Application for Texas Title (PDF), when purchasing or registering qualifying farm machines, trailers and semi-trailers.

I am in the military. Can I purchase a vehicle without paying motor vehicle tax?

No. United States and most foreign military personnel are subject to the motor vehicle sales and use tax. However, foreign military personnel, their dependents and military-employed civilians attached to NATO are exempt from the sales and use tax on motor vehicles.

When does the $10 gift tax on a motor vehicle apply?

The only transactions that qualify to be taxed as gifts ($10) are those where the vehicles are received from a:

  • parent or stepparent*
  • grandparent or grandchild*
  • child or stepchild*
  • sibling*
  • guardian
  • decedent's estate
  • spouse

*including in-laws

A vehicle also qualifies to be taxed as a gift when it is donated to, or given by, a nonprofit service organization qualifying under the Internal Revenue Code, Section 501(c)(3). All other motor vehicle transfers made without payment are defined as sales and are subject to tax calculated on the standard presumptive value of the vehicle.

Both the vehicle donor and recipient must complete Form 14-317, Affidavit of Motor Vehicle Gift Transfer (PDF), which describes the transaction and the relationship between the parties. The affidavit must be notarized by a public notary of Texas or another state, or witnessed by an authorized employee of a Texas county tax assessor-collector's office. The affidavit must be provided to the county tax assessor-collector along with Form 130-U, Application for Texas Title (PDF), when the vehicle is registered in the new owner's name.

I am leasing a vehicle in Texas. Do I owe motor vehicle tax?

A motor vehicle purchased in Texas to be leased is subject to motor vehicle sales tax. The lessor is responsible for the tax, and it is paid when the vehicle is registered at the local county tax assessor-collector's office. The lease contract is not subject to tax.

Do I owe tax if I bring a leased motor vehicle into Texas from another state?

When a vehicle is leased in another state and the lessee brings it to Texas for public highway use, the lessee (as the operator) owes motor vehicle use tax based on the price the lessor paid for the vehicle. The standard tax rate is 6.25 percent. Credit will be given for any tax the lessor or the lessee paid to another state.

What is the surcharge on diesel-powered, on-road motor vehicles?

A surcharge applies to both new and used diesel-powered, on-road motor vehicles with a gross vehicle registered weight exceeding 14,000 pounds purchased inside or outside Texas. The surcharge also applies to a vehicle that is brought into Texas by a new resident. The rate is 1 percent for model years 1997 and later, and 2.5 percent for model years 1996 and earlier. The surcharge is paid to the county tax assessor-collector and administered in the same manner as the motor vehicle sales tax.

What requirements must dealers follow on a motor vehicle purchase by an orthopedically handicapped person?

A dealer selling a motor vehicle may not collect motor vehicle sales tax when a purchaser claims an exemption for an orthopedically handicapped person. To qualify for the exemption, the purchaser must complete Form 14-318, Texas Motor Vehicle Orthopedically Handicapped Exemption (PDF), and provide any applicable supporting documentation at the time of the sale. The selling dealer must retain the exemption form.

When I went to the county tax assessor-collector's office to register my truck with farm plates, they told me I needed a number from the Comptroller's office. What do I need to do and why?

You must provide a Comptroller-issued ag/timber number to the county tax assessor-collector for the initial issuance of farm plates, for farm plate renewals and when obtaining a temporary excess weight permit. The ag/timber number presented must be issued in the name of the person or DBA in which the vehicle is, or will be, registered.

Persons engaged in the production of agricultural or timber products for sale in the regular course of business can apply for an ag/timber number on our website. Qualified applicants who apply online will receive a registration number immediately.