Five states have no vehicle property tax at all
Alabama, Arizona, Louisiana, Mississippi, and Missouri do not charge property tax on vehicles. This means you will not receive a property tax bill from the state for owning a car, truck, or motorcycle, regardless of its value or age.
However, this does not mean vehicle ownership is tax-free in these states. Most still charge registration fees, title fees, and sales tax when you buy the vehicle. Some also charge annual registration renewal fees that function similarly to property tax but are classified differently. The absence of property tax specifically means the state does not assess the vehicle's current market value each year and tax that value.
If you own a vehicle in one of these five states, you will still need to register it, renew your registration on schedule, and pay any applicable sales tax at purchase. You simply will not pay an ongoing annual tax based on what the vehicle is worth.
Key Takeaways
- Alabama, Arizona, Louisiana, Mississippi, and Missouri impose no property tax on vehicles of any kind.
- No vehicle property tax does not mean no vehicle costs — registration fees, title fees, and sales tax still apply in these states.
- Other states tax vehicles based on their current value, age, or both, so the savings vary depending on where you live and what you own.
- Some states without vehicle property tax charge higher registration or renewal fees to offset the lost revenue.
How vehicle property tax works in other states
In states that do charge vehicle property tax, the amount depends on the vehicle's assessed value, which usually declines each year as the vehicle ages. A new car worth $30,000 will have a higher tax bill than the same model five years old. Some states use the manufacturer's suggested retail price (MSRP) or a depreciation schedule to set value; others use local assessments.
The tax rate also varies widely. Some states charge less than 1 percent of the vehicle's value annually; others charge 2 percent or more. A few states allow counties or cities to set their own rates, so the total tax you owe depends on where in the state you register the vehicle. This means two identical vehicles registered in different counties of the same state can have different tax bills.
States with vehicle property tax typically collect it through the county assessor's office or the department of motor vehicles. You usually pay it when you renew your registration each year. The bill arrives with your registration renewal notice.
Registration and title fees in states without vehicle property tax
The five states without vehicle property tax still charge fees to register and title a vehicle. These are one-time or annual costs, but they are not calculated based on the vehicle's value the way property tax is.
Registration fees in these states typically range from $50 to $200 per year, depending on the vehicle type and the state. A motorcycle may cost less to register than a truck. Title fees — the one-time charge to register ownership when you buy the vehicle — usually run $15 to $50. Some states charge additional fees for vanity plates, commercial use, or other special designations.
Because these fees are flat amounts rather than percentages of value, owners of expensive vehicles save more money in these states than owners of inexpensive ones. A person buying a $50,000 vehicle in a state with 1.5 percent vehicle property tax would pay $750 per year; in a no-tax state, they might pay $100 to $150 in registration fees instead.
Sales tax on vehicle purchases applies everywhere
All five states without vehicle property tax do charge sales tax when you purchase a vehicle. Sales tax rates vary by state and sometimes by county within a state. Louisiana's sales tax on vehicles ranges from 4 percent to 7.45 percent depending on the parish; Alabama charges 2 percent to 8 percent depending on county; Arizona charges 5.6 percent statewide; Mississippi charges 7 percent statewide; Missouri charges 4.225 percent statewide.
Sales tax is calculated on the purchase price and paid at the time of sale, usually to the dealer or the DMV. It is a one-time cost, not an annual one. After you pay sales tax at purchase, you do not pay it again when you renew your registration.
Why some states eliminated vehicle property tax
States remove vehicle property tax for different reasons. Some did so to encourage vehicle ownership or reduce the administrative burden of assessing thousands of vehicles annually. Others eliminated it as part of broader tax reform. The timing varies: Alabama and Louisiana removed it decades ago, while others phased it out more recently.
The revenue lost from eliminating vehicle property tax is usually replaced through higher registration fees, sales tax, or other state taxes. This means the state still collects money from vehicle owners, but through a different mechanism. The shift often benefits owners of expensive vehicles and penalizes owners of inexpensive ones, since registration fees are flat amounts regardless of value.
Comparing total vehicle costs across states
Whether you pay less in a no-tax state depends on what vehicle you own and how long you keep it. A person who buys a $20,000 car and keeps it for five years will save more in a no-tax state than someone who buys a $8,000 used car. The savings also depend on the specific tax rate and registration fees in the state you are comparing to.
If you are considering moving or registering a vehicle in a different state, calculate the total cost: purchase price times the sales tax rate, plus annual registration fees for the years you plan to own the vehicle. In a state with property tax, add the annual property tax amount. This gives you the true cost difference.
Keep in mind that vehicle costs are only one factor in a move or registration decision. Insurance rates, fuel prices, and road conditions also affect the total cost of ownership and vary by state and region.
Frequently Asked Questions
Do I have to register my vehicle in the state where I live?
Yes. You must register your vehicle in the state where you live or where you primarily keep it. Registering a vehicle in a different state to avoid taxes is illegal and can result in fines or vehicle impoundment. The DMV in your state of residence determines which taxes and fees apply.
If I move to one of these five states, do I have to re-register my vehicle?
Yes. When you move to a new state, you must register your vehicle there within a set timeframe, usually 30 to 90 days. You will pay the sales tax and registration fees of your new state. You do not pay property tax in the five states listed, but you will pay other fees and taxes as described above.
Are motorcycles and RVs taxed differently than cars?
In the five states without vehicle property tax, motorcycles and RVs are also not subject to property tax. However, registration fees may differ. Some states charge less to register a motorcycle than a car, and RVs may have separate registration categories with their own fees. Check your state's DMV website for the specific fee schedule.
Can I deduct vehicle property tax on my federal income tax?
Yes, if you live in a state that charges vehicle property tax, you can deduct it on your federal tax return as part of the state and local taxes (SALT) deduction, up to $10,000 per year. Since the five states listed do not charge vehicle property tax, there is nothing to deduct. Registration fees are not deductible.