Over the course of the next year there are huge changes coming to the tax policies on cars in the state of Georgia. Beginning on March 1, 2013 there will no longer be any sales taxes charged on new or used cars in Georgia. Sales taxes will be replaced with a new 6.5% title in tax in 2013 which will increase to 6.75% in 2014. This will apply to both dealership and private party purchases.
The title tax is not due every year and Ad Valorem taxes are being eliminated on cars purchased after March 1, 2013. You will continue to pay Ad Valorem taxes on any cars that you currently own.
The title tax will be charged on a fair market value, not the sale price. We have no idea how this will be determined.
If you purchase a car between January 1, 2012 and March 1, 2013 you will have the opportunity to opt-into the program after it begins on March 1, 2013 (but before December 31, 2013). You will have to pay the difference between the sales tax that you paid when you purchased the car (if you live in a 6% county).
You will still have to get an annual emissions inspection in counties where it is currently required. Tag renewal fees are also still going to be charged.
The biggest difference between the new program and the current sales tax structure is that there are no trade credits anymore. The title tax will be assessed on the vehicle value, not the net cost after trades are included.
What does this mean for you? Between now and March 1st of next year you should trade your car in to get the last chance at a discount of registration taxes. We will be able to give you the same trade credit towards sales tax that we always have until then. You will have to pay an annual ad valorem tax for as long as you own the car but that will be much less than the sales tax would have been on your entire purchase in most cases.
It is going to be a major change but we will do our best throughout the process to keep you informed and offer you the most beneficial options available.
Ed, Say I am contemplating a purchase of a $70,000.00 car between today and January 2, 2013. Which program results in the least amount of taxes over the five year life of the car, the existing tax structure or the new program that I can opt into if I delay my purchase until January 2, 2013? Thanks, Gene
If you buy the car from a private party today and you are a Georgia resident, you will not pay any sales taxes. Just $21 for a title, and $18 for a tag.
If you are buying the car from a dealership, you will pay either 6 or 7% in sales tax. That would be $4,200-4,900.
30 days before your birthday you will have an Ad Valorem payment due either way. It depends on your county and what kind of car it is but that will probably be between $500-1,000 annually. If do not opt into the new program, you will pay Ad Valorem each year and it will decrease slightly over time.
If you opt in, any sales taxes you paid this year will be credited toward the 6.5% title tax and you will no longer have to pay Ad Valorem each year. That means that if you pay sales tax when you buy it, there is almost no cost to opt in even if you are in a 6% county. If you did not pay sales tax when you bought the car due to it being a private party transaction or because you had a trade to diminish the sales tax, then your break even point will the sales tax due divided by your annual Ad Valorem payment which is probably between 4-8 years.
This is a terrible law
It is a terrible law. Lets say you buy a car at a great deal…you still will pay taxes on its value. Say you flip the car, the state gets taxes in full on the value of the vehicle in one year….that shits not right.
taxing used cars has been tried before and fell through. this bill 386 is a mess and should not have been passed in the dark of night. Again our representative in Atlanta think they are helping us without thinking about what is going to do to our budgets.
This continues to be a problem in Atlanta just pass it no one will notice.
This will more than double the down payment on any car sold in Georgia . The finance companies will only carry a note for the value of the vehicle, max.
Some finance companies will only loan a part of the vehicles value. The buyer will have to have the difference . up front , before buying a vehicle that has to be financed . It is not just Georgia lawmakers that have lost all common sense , The federal government is far worse . Any new law needs to be vented by the people and by the auto dealers to find the negative effects. Be sure in every law there are unintended effects, and the more stupid the law makers are , The more problems we will have.
If I am an Alabama resident with Alabama tags and the value of my 3 cars is $50,000 then I will have to pay 6.5% or $3250 to get Georgia tags when I move to Georgia, is that how it works?(Note: I got two different answers from the tag office, they dont know themselves.)
this tax is ridiculous. you think you are helping but you are very wrong. this is another decision made by leaders who have lost touch with reality. funny how the government is “for” the people but makes decision that hurt the people.
What tha hell kinda new law is this, im just confused what does this mean in english! Can someone explain, all i got at tha tag office is a damn flyer! No real explanation as to what this bill means! I didnt vote for this, or do i count?
I agree with the others. This is not a bright idea to tax cars when you register them.
This will encourage people to never tag a car in Georgia. Trust me, I am from Florida and the tags alone here are expensive enough! Add 6.5 %!! Give me a break.
We have 5 cars and two trucks, guess how many of them are staying in Florida….
We also tried talking to the tag office in Rabun County to get the facts straight and I don’t think they get it either….
If I calculated right, I will pay a full months salary AFTER taxes are taken out {net income} just to get my new plate and register??? How the hell to I pay my bills during April??? How do I pay for gas to get to work??? OMG
First…if you buy at a dealer the law is written in a way so you can finance the cost of the sales tax into your total loan..you cannot do that with a private sale. On a New Car sale that costs $45,000 you will pay a $2,800 (roughly) title tax or sales tax. You can pay that separately or roll it into your payment but the dealer is responsible for doing that paperwork and getting your title, you then pay the normal tag fee $18 at DMV. In a private sale you will be assessed the average price between the “Fair Market Value” and “Trade-In Value” and then multiplied by 6.5%. You are responsible for the Title tax! Make sure you budget because after you pay for the car you will need to shell out a few hundred more at the DMV. If a used car fair market value is 8,000 and the dealer trade in value is 5,000 you will average the two amounts. $8000 + $5000= 13,000 divided by 2 = $6,500 X 6.5% = $422.50 title tax.
It is a hard pill to swallow, yes, especially for those who don’t like large new car payments. It will also encourage more people to buy from dealerships rather than fork over the additional tax. Private sellers will have to revalue their cars in consideration of this tax, whereas dealers will not. The bright side to all this is once you paid that title fee you will no longer receive that nasty Ad Valorem tax notice on your birthday…you just pay the $18 tag renewal and $20 emissions.
Hope this helps.
Looks like DEALERS have lobbied and greased congressmen to discourage the private party car sales. What a terrible thing
This is sweet, the people who buy a car in another state of their residence at the time of purchase will pay sales tax for that purchase, then if they to relocate to Georgia in this wonderful economy they will pay another 6% to 7% or maybe 9% in future to register the vehicle in Georgia. This will really encourage growth in Georgia!!!
And ,for the wonderful concept of convenience for the dealer to provide financing for the TAX, don’t forget the additional interest cost that is incurred over the finance term. The dealer gets a piece of that from the finance company or if the dealer finances, it will be in dealers pocket.
This looks like a scheme concocted by the auto dealers!
Is there somebody involved in this legislation that is an auto dealer or maybe brother in-law good ol’boy???