taxes

Motor Vehicle Tax Guide

Even Exchange Tax

Texas law imposes a $5 even exchange tax on each motor vehicle acquired in an even exchange. Even exchanges of motor vehicles are excluded from standard presumptive value (SPV) procedures.

An even exchange is the exchange of a motor vehicle for another motor vehicle that involves no other consideration (i.e., payment). The exchange can involve multiple motor vehicles as long as no other consideration is involved.

A person cannot use a motor vehicle that is on an "open title," meaning that it has been reassigned but not titled in that person’s name, in an even exchange.

An even exchange of two motor vehicles can occur even when one of the vehicles has a Texas title and the other has an out-of-state title and is owned by an out-of-state resident. In this situation, the out-of-state resident who accepted an even exchange with a person who resides in Texas does not have to obtain a Texas title before making the exchange. The county tax assessor-collector (CTAC) should collect the $5 even exchange tax from the Texas resident when the Texas resident obtains a title on the motor vehicle. The Texas resident would have to show proof of an even exchange.

Form 130-U

The parties must document each transaction on a separate Form 130-U, Application for Texas Title and/or Registration (PDF). The parties are not required to present these forms to the CTAC at the same time.

Dealer Exception

A dealer is not required to file Form 130-U (PDF) or pay tax on a motor vehicle received in an even exchange when the dealer holds that motor vehicle exclusively for resale and not for the dealer’s own use.

Examples of Scenarios That Are Not Even Exchanges

Scenario 1 – David swapped motor vehicles with Laurie, but also gave her $2,000. The motor vehicle David exchanged with Laurie is worth $8,000, while the motor vehicle Laurie exchanged with David is worth $10,000. Why is this not an even exchange?

Answer – An even exchange involves only the exchange of motor vehicles. In this example, David gave Laurie $2,000 as part of the transaction, so this is not an exchange of only motor vehicles. SPV procedures may apply. David receives a trade-in credit of $8,000.

Scenario 2 – Don has a $5,000 vehicle with a $1,500 lien, and Michelle has a vehicle worth $3,000. They exchange motor vehicles. Michelle assumes the $1,500 lien on the motor vehicle from Don. Why is this not an even exchange?

Answer – The lien assumption is other consideration Michelle has given for Don’s vehicle, and this transaction is not an even exchange. Don has a "trade-down" and owes no motor vehicle tax. Michelle, however, is “trading up” and has a trade-in credit of $3,000. SPV procedures may apply. Therefore, Michelle owes tax on the greater of $2,000 (the value of the vehicle received from Don minus the value of the trade-in) or SPV.

96-254
(12/2025)