The AirCheckTexas program, which participating counties and councils of government administer, provides vehicle replacement grants, as well as vehicle repair assistance, to low-income owners of polluting vehicles. Visit the Texas Commission on Environmental Quality's website for information on applying for a voucher under this program.
The amount of a vehicle replacement grant is not subject to motor vehicle sales tax, because the law excludes the amount of the grant from the total consideration paid for a motor vehicle.
Parts used to repair motor vehicles are subject to sales and use tax, not motor vehicle sales tax.
If the participating county gives funds directly to the person receiving vehicle repair assistance, sales tax is due on the repair parts.
No sales tax is due on repair parts that are paid for with funds the participating counties pay directly to the service provider. The service provider should apply the funds paid by the county to the repair parts, which are taxable, first. The customer owes sales tax on the cost of any repair parts in excess of the amount of the grant payment. Repair labor is not taxable.
EXAMPLE: A car repair bill totals $1,250: $750 in parts and $500 in labor. The program pays $600 directly to the service provider, who applies the payment to taxable parts first, reducing the balance due on the parts to $150. The vehicle owner owes sales tax on the remaining $150 due on the parts. Exemption certificates are not required.