Motor vehicles purchased by U.S. military personnel and most foreign military personnel are subject to motor vehicle sales and use tax. The Servicemember’s Civil Relief Act (formerly known as the Soldier and Sailor’s Relief Act), which exempts the U.S. military from some state and local property and income taxes, does not apply to motor vehicle taxes. There is no exemption from motor vehicle tax even if the motor vehicle is purchased in another state, overseas or through a base exchange.
The domicile of military personnel is presumed to be their home state of record (also referred to as home of record) as indicated on the person’s military records; therefore, for motor vehicle sales and use tax purposes, military personnel who claim Texas as their home state on their military records are considered Texas residents and do not qualify for the $90 new resident tax. Military personnel who are transferred to Texas and whose home of record on their military records is a state other than Texas qualify as new residents to Texas. The new resident tax applies when the motor vehicle was previously registered in the new resident’s name in another state or foreign country.
Foreign military personnel, their dependents and military-employed civilians attached to a North Atlantic Treaty Organization (NATO) force are exempt from motor vehicle sales and use tax.
When a military member with Texas as their home state of record purchases a motor vehicle in Texas, the 6.25 percent motor vehicle sales tax is due. When sold by a dealer in Texas, the motor vehicle sales tax is calculated on the retail sales price, less trade-in allowance. If sold by someone other than a dealer (i.e., private party), standard presumptive value (SPV) procedures may apply.
When a motor vehicle is purchased outside of Texas and brought into Texas for use by a military member whose home of record is Texas, the 6.25 percent Texas motor vehicle use tax is due; SPV procedures may apply if the vehicle was a private-party purchase.
A Texas military person who is stationed outside Texas, but chooses to register a motor vehicle in Texas, is also subject to motor vehicle tax, since the motor vehicle is presumed to be for use in Texas.
Another state may require its state registration on a Texas motor vehicle owned by a Texas resident who is in that state temporarily on military orders, even though the Texas resident previously registered and paid motor vehicle tax on the motor vehicle in Texas. If this is the case, there is no liability for any additional motor vehicle tax when the resident re-enters Texas with the same motor vehicle. Proof of motor vehicle tax paid to Texas or previous titling in Texas is required when the motor vehicle returns to Texas.
Out-of-state U.S. and foreign military personnel (excluding foreign NATO personnel) who enter Texas may qualify for the new resident tax on motor vehicles purchased outside Texas and brought into Texas for use. The military person must have previously registered the motor vehicle in their name in another state or foreign country. U.S. military registration is qualified registration. If the registration requirement is not met, 6.25 percent motor vehicle use tax is due and SPV procedures may apply.
Credit toward the Texas motor vehicle use tax is allowed for legally imposed sales or use tax paid to another state, Puerto Rico and any U.S. possession or territory. Credit is not allowed for tax paid to a foreign country or toward the new resident tax paid in Texas.
Active duty members of the military, including the National Guard and reserve units, have 60 calendar days from the date of Texas purchase or first use in Texas to transfer title and pay registration fees on the purchase of a used motor vehicle, as provided in Motor Vehicle Sales Tax Rule 3.68, United States and Foreign Military Personnel Stationed in Texas, and Transportation Code Section 501.145, Filing by Purchaser; Application for Title Transfer.
The Comptroller’s office, by rule, has set the tax payment deadline to the same 60 calendar-day time period for active duty military personnel, including the National Guard and reserve units, rather than within the 30 calendar-day requirement for the purchase or first use in Texas by non-military personnel. When SPV procedures apply to the private-party purchase of a used motor vehicle by active duty military personnel, a certified appraisal obtained within the same 60 calendar-day time period will be acceptable.
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