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Changes heading for car taxes in Georgia

'Birthday tax' will be history for many vehicle owners as of March

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POSTED: January 13, 2013 9:30 a.m.

Georgia residents who plan to purchase a new or used vehicle in the coming year may see some changes in the way they pay taxes on their mode of transportation.

The “title tax law,” or House Bill 386, is set to take effect on March 1 and will eliminate the sales tax and the ad valorem tax, or the “birthday tax,” car owners have paid on vehicles in the past, said Bryan County Tax Commissioner Carrol Ann Coleman.

Instead of the birthday tax paid annually, drivers will have a one-time payment known as the title ad valorem tax fee (TAVT). Coleman said from March 1 to Dec. 31, the tax will be 6.5 percent of the vehicle’s worth, but that will increase to 6.75 percent in 2014 and to 7 percent in 2015. The tax could eventually be as high as 9 percent of the value of the vehicle, she said.

“It’s not all said and done, and the law may be tweaked between now and when the Legislature is done in March,” Coleman said. “But as far as we know now, this is what the law says.”

One change under the new law is the taxation of vehicles sold privately.  

“In the past, if vehicles were purchased through casual sales — like if you bought one on Craigslist or from a neighbor down the street — you didn’t have to pay sales tax. You just had to come and start paying your birthday tax based on the value of the car,” Coleman explained. “Well now the ad valorem tax will be paid — that 6.5 percent based on (the car’s value).”

Coleman said she believes people who purchase vehicles in private sales will be most surprised by the change.

“People who do casual sales are probably the ones that I would prefer not to be blindsided by this,” she said. “They may not be expecting it — they already don’t have to pay sales tax, but they will have to pay the 6.5 percent.”

Casual sales between immediate family members — spouses, parents, children, siblings, grandparents or grandchildren — will pay a reduced fee of 0.5 percent of the car’s worth to title the vehicle, provided the full one-time title ad valorem tax already has been paid, Coleman said.

And anyone who has purchased a car since Jan. 1 of last year or plans to do so before March 1 will get to choose which tax they pay: the annual birthday tax for as long as they own the vehicle; or the new one-time fee.

Coleman said those who bought a car since Jan. 1, 2012, and wish to opt in must do so between March 1 and Dec. 31 by going to the tax commissioner’s office to receive the proper paperwork.

Those thinking of buying a car before March 1: “If you go to a dealership, you pay the 7 percent sales tax, and if you opt in (for the new fee) you will get credit for having paid the ad valorem tax for the life of the car,” she said.

Coleman noted that car owners will continue to pay their annual tag fee will, which varies depending on vehicle type.

Residents who purchased their vehicles prior to Jan. 1, 2012, won’t have the chance to opt in on the one-time fee and will continue to pay the birthday tax as long as they own their vehicle.

Read more in the Jan. 12 edition of the News.

 

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