Do I Have to Pay Georgia Ad Valorem Tax on a Car From Another State?

Georgia residents who purchase vehicles outside the state are not likely to find much of a break on taxes. Cars purchased outside the state may avoid a specific sales tax when initially acquired. However, once brought into Georgia, the vehicle must be titled under state law through the Georgia Department of Motor Vehicles (GADMV) and will become subject to ad valorem taxes based on the value of the vehicle.

Vehicles Bought in Another State

Georgia regards automobiles, trucks and other transport vehicles purchased out of state as taxable goods. Residents of Georgia who purchase new or used vehicles in another state are expected to pay use taxes upon returning with the vehicle to Georgia if they did not pay sales taxes in the state where the vehicle was bought. A typical bill of sale will suffice as documentation of the purchase, but other documents such as proof of residence, emissions, proof of insurance and more may be required. Ad valorem tax will be assessed on the newly purchased vehicle once the owner attempts to register the car title in Georgia. Car titling and registration — two separate procedures — will need to be done at the same time.

Ad Valorem Tax in Georgia

Ad valorem taxes on vehicles, often referred to as “the birthday tax,” are calculated once per calendar year on each vehicle, although the process was slated to change in March 2013. The state has adopted a new way of calculating ad valorem taxes, called the Title Ad Valorem Tax (TAVT), which eliminates the annual tax computation and replaces it with a one-time tax incurred on the day the vehicle is purchased or when title is first established with the state. The TAVT formula also eliminates state sales and use tax on all vehicles, though even if a buyer paid sales taxes in another state, they will still face the TAVT when titling the car in Georgia.

TAVT in Detail

In all cases, the trade-in value of a vehicle used to purchase a new or used vehicle is calculated for inclusion into the state’s overall TAVT calculation. For example, a car purchased for $20,000 in April 2013 with no rebates or trade-in considerations would be subject to a $1,300 one-time TAVT. If that same purchaser had traded in a vehicle with a $5,000 value, the TAVT would be only $975. These figures are based on estimates provided by the Georgia Department of Revenue’s (GADOR) TAVT online calculator.

Ad Valorem Tax Rates

The TAVT is an annually progressive rate phased in over 10 years. From March 2013 until the end of that year, the rate was scheduled to be 6 percent. That was slated to rise to 6.5 percent in 2014 and to 7 percent in 2015. The rate can be increased each year by GADOR after 2015 until it hits a ceiling of 9 percent.

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About the Author

Mark Hoerrner is a writer and editor with more than 15 years of professional experience. His work has appeared in newspapers, magazines, textbooks and online publications, covering business, technology, civil/criminal investigation and international culture.

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