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'Birthday' Title Tax on New Cars Goes Away After March 1

HB 386 replaces the annual ad valorem tax on newly purchased vehicles.

The so-called "birthday tax" that Georgia vehicle owners pay will end in March 2013 – for people who purchase a new vehicle.

Visit the Fulton County Tax Commissioner's North Fulton Office in Alpharetta, on Royal Drive just off North Point Parkway, and next door to the North Fulton Regional Health Centers.

Vehicles purchased on or after March 1, 2013 and titled in this state will be exempt from sales and use tax and the annual ad valorem tax, according to the Georgia Department of Revenue. Instead, these vehicles will be subject to a new, one-time title ad valorem tax (House Bill 386) that is based on the value of the vehicle.

The Fulton County Tax Commissioner's website explains what these major changes mean.

Forsyth County Chief Deputy Tax Commissioner David Hicks explains what these major changes mean.

"When you go to the dealer, like you use to, you pay sales tax when you bought a vehicle and that sales tax was based on whatever rate of the county where it was purchased," he said. "That's going away, so it's kind of a wash in that regard."

If you buy a new vehicle where as you were paying sales tax on that vehicle, now it's called a title tax and is pretty much the same rate, according to Hicks.

It's going to be 6.5 percent in 2013, 6.75 percent in 2014, in year three it will increase to seven percent and so on. But you will not be paying the ad valorem tax on that new vehicle on your birthday every year.

But the difference in how the new tax law will affect individuals who purchase a vehicle from another individual.

"Let's say you found an auto on Craigslist and you went to the people's house and paid for the car, you would come in [tax commissioners office] to apply for a title and in the past you would just pay the $18 title fee and tag fee," Hicks said. "Now there's going to be the title tax on that kind of purchase as well on a private sell."

The tax is based on the fair market value of the vehicle at the time of the purchase or the sales price whichever is higher.

"So you get a great, great deal on a car, but it's actually worth, let's say you paid seven for it, but the Bluebook value, for example is 10, you would pay [taxes] based on the $10,000," said Hicks.

Hicks said that's the only real change: private sales that traditionally were exempt from being taxed, will now be taxed.

"And that's to help offset any shortfalls in revenue from the annual ad valorem tax going away," he said.

However, you will continue to pay the annual ad valorem tax on vehicle(s) that you currently own.

Other aspects of the new law:

  • The new title tax is based on a percentage (6.5 percent in 2013) of the fair market value of the vehicle, not the sales price, as determined by the Georgia Department of Revenue.
  • If you purchase a vehicle in Georgia between January 1, 2012, and March 1, 2013, you have the option of paying the new title tax instead of the current annual ad valorem tax. You have from March 1, 2013, until December 31, 2013, to opt into the new program. Note: Vehicles purchased out-of-state are not eligible to opt in.
  • All other existing annual vehicle registration requirements, including annual tag renewal fees, decals, and emission tests (if applicable), remain in effect for all vehicle owners.

What vehicles are not subject to the TAVT?

Non-titled vehicles and vehicles that do not meet the statutory definition of a motor vehicle will continue to pay the annual ad valorem tax. For example, the following do not qualify as titled vehicles:

  • Trailers.
  • Pull-behind campers.
  • Any vehicle for which a title cannot be issued, such as
  • Vehicles manufactured prior to 1963.
  • 1963 -1985 year model vehicles that do not have a current Georgia title.

Will the new Georgia tax affect your decision to purchase a new vehicle? Share your thoughts in the comments below.

Steve Burns contributed to this article.

miltonman33 February 19, 2013 at 05:40 PM
The auto dealers association lobbied heavy for this. It curbs the savings now from buying from a private party. In addition, the vehicles "fair market value" is determined by the state or by Kelly Blue Book? Fair market value is automatically determined by purchasing said car on the open market! It regulates itself. If they are trying to preclude people buying and selling cars and listing the sales as $100, there are existing laws in place for that - it's fraud. This entire re-write was paid for by lobbyist and rubber stamped as its another cash cow for taxable income. It just doesn't stop.
Philip Beck February 22, 2013 at 01:29 AM
I must confess that even with a BBA, I found this description of this new law difficult to grasp. "All other existing annual vehicle registration requirements, including annual tag renewal fees, decals, and emission tests (if applicable), remain in effect for all vehicle owners." When are tag renewal fees due? If they are due when the property taxes are due, are we going to have to deal with every vehicle owner lining up at the emission testing facility just before the fee is due? "However, you will continue to pay the annual ad valorem tax on vehicle(s) that you currently own." When will this be due?
Philip Beck February 22, 2013 at 02:14 PM
I asked a tax commissioner friend and he emailed "On March 1, and thereafter you will Not pay sales tax but will pay the 6.5% Title Ad Valorem Tax on your vehicle purchases. Vehicles purchased between Jan 2012 to Feb 2013 can get credit for the sales tax paid toward opting in to the TAVT system on your tag renewal at the time of your birthday. You will only pay $20 for the tag renewal as long as you own that car. Try this link to calculate your tag ad valorem..http://onlinemvd.dor.ga.gov/Tap/welcome.aspx
Tatum Jones June 11, 2013 at 09:33 AM
What about people who own their vehicle and had their title switched to Ga. Shouldn't they fall under the same new tax law? I had to get my tag switched to Ga and had to pay taxes, tag title and emissions on my birthday in august 2012 after my registration expired from Florida. In FL I paid the sales tax up front included in the purchase. Why should I have to pay taxes every year in Ga for a car I already paid taxes for in FL? **Not fair!!** Ga is so out of hand with taxes and spending. At least add sidewalks and street lights to show us where all this money is going!
Teos June 11, 2013 at 12:56 PM
If you register an out-of-state vehicle in GA after March 1 2013 you will have to pay the one-time 7% (or so) fee to register the car. If you registered the car before that date you will still have the birthday tax.

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