Vehicle excise tax is a yearly tax on car ownership, separate from sales tax
A vehicle excise tax is an annual tax you pay to your state or local government for owning a car, truck, or motorcycle. It is not the sales tax you pay when you buy the vehicle — it is a recurring tax that comes due each year, usually when you renew your registration.
The amount you owe depends on the vehicle's value, age, and sometimes its weight or engine size. States calculate it differently. Some base it on the manufacturer's list price; others use the vehicle's current market value. A few states charge a flat fee per vehicle instead of a value-based amount.
You typically pay the excise tax to your state's Department of Motor Vehicles, county assessor's office, or local tax collector — whoever handles vehicle registration in your area. The tax is often collected at the same time you renew your registration plates, so you pay it once a year in one lump sum.
Key Takeaways
- Vehicle excise tax is charged annually based on your vehicle's value, age, or weight, and is separate from sales tax.
- The tax amount varies by state and is calculated using different methods — some states use the original purchase price, others use current market value.
- You pay excise tax when you renew your vehicle registration, usually to your county assessor or local tax collector.
- Older vehicles typically have lower excise tax because their value decreases over time.
- Some states exempt certain vehicles, such as electric cars, antiques, or vehicles owned by disabled veterans.
How states calculate the amount you owe
States use three main methods to calculate vehicle excise tax. The most common is depreciation-based, where the tax is a percentage of the vehicle's current market value. A new car pays more; as the car ages and loses value, the tax decreases. After 10 to 15 years, the tax may drop to nearly zero.
Some states use list-price-based calculation, where the tax is a percentage of the manufacturer's original suggested retail price (MSRP). This amount stays the same year to year, regardless of how much the car is actually worth now.
A smaller number of states charge a flat fee per vehicle, sometimes adjusted by weight class or engine size. For example, a state might charge $50 per year for all passenger cars, $75 for trucks over a certain weight, and $100 for commercial vehicles.
A few states do not charge a vehicle excise tax at all. Others charge it only on commercial vehicles or vehicles registered for business use. Check your state's Department of Motor Vehicles website or contact your local assessor's office to find out which method applies where you live and what your specific tax will be.
Which vehicles are taxed and which may be exempt
Most states tax all passenger vehicles — cars, SUVs, trucks, and motorcycles — once they are registered. The tax applies whether you own the vehicle outright or are financing it through a loan.
Common exemptions include:
- Electric and hybrid vehicles: Many states offer a partial or full excise tax break for electric cars or plug-in hybrids to encourage clean energy adoption.
- Antique and classic vehicles: Cars over a certain age (often 25 to 40 years old) may be taxed at a reduced rate or exempted entirely.
- Disabled veteran vehicles: Some states waive or reduce excise tax for vehicles owned by disabled veterans with a service-connected disability rating.
- Government and nonprofit vehicles: Vehicles owned by federal, state, or local government agencies, or by registered nonprofits, are often exempt.
- Farm and commercial vehicles: Vehicles registered for agricultural or commercial use may have different tax rates or exemptions.
If you think your vehicle qualifies for an exemption, contact your county assessor or local tax collector with proof of ownership and the reason you believe the exemption applies. They will tell you whether you are correct and how to document it.
When and how to pay your vehicle excise tax
Vehicle excise tax is due when you renew your vehicle registration. In most states, registration renews every one or two years on your birthday, the date you bought the car, or another fixed date set by your state. You will receive a notice in the mail before the due date.
You can usually pay in person at your county assessor's office, local tax collector's office, or Department of Motor Vehicles branch. Many states also allow online payment through their DMV website. Some accept payment by mail, phone, or through an authorized third-party vendor.
The payment method and deadline vary by state and sometimes by county. Check the notice you receive or your state's DMV website for the exact due date and accepted payment methods in your area. If you miss the deadline, you may face a penalty or late fee, and your registration may be suspended.
What happens if you do not pay
If you do not pay your vehicle excise tax by the due date, your vehicle registration will typically be marked as delinquent. You may receive a second notice with a late fee added to the original amount owed.
If you continue not to pay, your registration may be suspended, which means your vehicle plates become invalid. Driving with suspended registration is illegal and can result in a traffic citation, fines, and possible vehicle impoundment.
If you cannot pay the full amount by the due date, contact your local tax collector or assessor's office immediately. Some jurisdictions offer payment plans, hardship deferrals, or the ability to pay in installments. The sooner you reach out, the more options you may have.
Excise tax versus sales tax and registration fees
Vehicle excise tax, sales tax, and registration fees are three separate charges, and they work differently.
| Type of Charge | When You Pay | What It Is Based On | How Often |
|---|---|---|---|
| Sales tax | At purchase, when you buy the vehicle | Purchase price of the vehicle | One time, at purchase |
| Registration fee | When you register or renew registration | Vehicle type, weight, or a flat fee | Annually or every two years |
| Excise tax | When you renew registration | Vehicle value, age, or weight (varies by state) | Annually or every two years |
In some states, excise tax and registration fees are combined into one bill. In others, they are separate line items. Your renewal notice will show which charges apply to your vehicle and your state.
Frequently Asked Questions
Do all states charge vehicle excise tax?
No. About half of U.S. states charge a vehicle excise tax. The other half do not, or charge it only on commercial vehicles. Check your state's Department of Motor Vehicles website or contact your local assessor to find out whether your state charges it.
Why does my excise tax amount change from year to year?
If your state uses depreciation-based calculation, your tax decreases as your vehicle ages and loses value. If your state uses list-price-based calculation, the tax stays the same unless the state changes its tax rate. Some states also adjust rates annually for inflation.
Can I deduct vehicle excise tax on my federal income tax return?
Vehicle excise tax is generally not deductible on your federal tax return. However, if you use the vehicle for business purposes, you may be able to deduct it as a business expense. Consult a tax professional about your specific situation.
What if I sell my vehicle mid-year — do I get a refund?
Refund policies vary by state. Some states refund a portion of the excise tax if you sell the vehicle before the registration period ends. Others do not offer refunds. Contact your local tax collector or assessor to ask about your state's policy.
How do I know if my vehicle qualifies for an exemption?
Contact your county assessor's office or local tax collector with your vehicle registration and proof of the reason you believe an exemption applies (such as a disability rating letter or antique vehicle documentation). They will review your claim and tell you whether you may have access to.