taxes

Motorcycles, Autocycles and Off-Road Vehicles – Which Tax is Due?

The type of tax due on the sale of motorcycles, autocycles, all-terrain vehicles (ATVs) and utility vehicles is based on whether the vehicle is designed for highway use or for off-road use.

This publication explains which tax applies to these sales: motor vehicle tax or sales and use tax.

Vehicles Designed for Highway Use – Motor Vehicle Tax

Motor vehicle tax is due on sales of vehicles designed for highway use, such as motorcycles and autocycles.

The motor vehicle tax rate is 6.25 percent. There is no local motor vehicle tax.

The tax is based on the total consideration paid for the vehicle, less any amount given for a trade-in motor vehicle.

The following charges are not part of the total consideration and are not taxable:

  • a documentary fee for handling registration and titling
  • motor vehicle inventory tax (VIT)

Permitted dealers collect the tax at the time of sale and remit it to the local county tax assessor-collector. If the seller does not collect the tax, the purchaser must pay the tax to the local county tax assessor-collector when the vehicle is titled and registered.

Vehicles Designed for Off-Road Use – Sales and Use Tax

Off-road vehicles are self-propelled vehicles designed for use off public streets and highways. These vehicles are not manufactured to meet motor vehicle registration and safety inspection standards.

Examples include:

  • dirt bikes
  • mini bikes
  • mini motorcycles
  • all-terrain vehicles
  • utility vehicles

Off-road vehicles are subject to sales and use tax.

The sales and use tax varies from state sales tax of 6.25 percent plus up to an additional 2 percent local sales tax depending on your location.

The tax is based on the sales price of the off-road vehicle, less any amount given for a trade-in, if the item traded is a similar type of property sold by the seller in the regular course of business.

Unlike motor vehicle tax, the motor vehicle inventory tax (VIT) and documentary fee are part of the vehicle’s sales price and are subject to sales and use tax.

Sellers are responsible for collecting the sales and use tax and for remitting the tax to the Comptroller’s office. If the seller does not collect the tax and an exemption does not apply, the purchaser must pay the tax to the Comptroller’s office using Form 01-156, Texas Use Tax Return (PDF).

An off-road vehicle that has been altered for use on public streets and highways is subject to motor vehicle tax and the tax is paid to the local county tax assessor-collector when the vehicle is titled and registered.

Off-Road Vehicles – Agricultural and Timber Exemptions

Off-road vehicles, such as ATVs and utility vehicles, used exclusively on a farm, ranch or in a timber operation in the production of agricultural or timber products for sale, are exempt from sales and use tax.

Tax is due on off-road vehicles used for recreational riding, hunting, wildlife management or any other purpose.

Agricultural Exemption

The agricultural exemption from sales and use tax applies to off-road vehicles used exclusively on a farm or ranch to:

  • build or maintain roads;
  • build or maintain water facilities; or
  • produce agricultural products sold in your regular course of business.

Timber Exemption

For timber operations, the sales and use tax exemption applies to off-road vehicles used exclusively in the production of timber products for sale.

Other Use

The exemption is lost if you use a vehicle for any other purpose, even if you also use the vehicle to produce agricultural or timber products.

For example, a utility vehicle qualifies for the exemption if you use it exclusively on your farm to spray crops, feed cattle, repair fences or for similar farm-related activities. You lose the exemption if you use the vehicle for non-qualified activities such as hunting or recreational riding. If you buy a vehicle tax-free under an agricultural or timber exemption and lose the exemption, sales and use tax is due. You must remit the sales and use tax based on the vehicle’s original sales price by submitting Form 01-156, Texas Use Tax Return (PDF), to the Comptroller’s office.

For more information about sales and use tax exemptions for agricultural equipment, see Agricultural and Timber Exemptions and Texas Taxes.

Agricultural and Timber Exemptions – How to Claim

To claim the sales and use tax exemption on an off-road vehicle, give the seller your agricultural and timber registration number and the appropriate exemption certificate when you make your purchase.

For agricultural use, give the seller Form 01-924, Texas Agricultural Sales and Use Tax Exemption Certificate (PDF).

For timber use, give the seller Form 01-925, Texas Timber Operations Sales and Use Tax Exemption Certificate (PDF).

98-805
(06/2017)