Car property tax by state
Car property tax is the exception, not the rule: most states tax a car once, when you buy it. A minority also tax it every year, the way a house is taxed, and that yearly bill is often bigger than the registration fee printed next to it.
Two ways states charge a yearly vehicle property tax
Collected with your registration. The tax is worked out from the value of the car and added to the renewal notice, so you pay it at the same time and in the same place as the registration. It goes by many names: ad valorem tax, excise, specific ownership tax, vehicle license fee. They all do the same job.
Billed separately by the county. The county assessor values the car and sends its own bill, on its own schedule. It never appears on the DMV fee schedule, which is why a registration estimate, including ours, leaves it out. Some states will not renew the plate until it is paid.
States that charge on value with the registration
These 16 states add a value based charge to the registration itself. The figures are worked out by our calculator for a new car with a $30,000 list price, using each state's own published schedule, and show only the value based part of the bill.
| State | What it is called | First year | Second year |
|---|---|---|---|
| Maine | Excise Tax | $720.00 | $525.00 |
| Massachusetts | Motor vehicle excise | $675.00 | $450.00 |
| New Hampshire | Town Permit Fee | $540.00 | $450.00 |
| Wyoming | County Fee | $540.00 | $450.00 |
| Colorado | Specific Ownership Tax | $535.50 | $382.50 |
| Arizona | Vehicle License Tax | $504.00 | $435.67 |
| Nebraska | Motor Vehicle Tax | $500.00 | $450.00 |
| Minnesota | Registration tax | $482.50 | $458.88 |
| Indiana | Motor Vehicle Excise Tax | $406.00 | $353.00 |
| Nevada | Governmental Services Tax | $399.00 | $357.00 |
| Iowa | Registration fee | $314.00 | $314.00 |
| California | Vehicle License Fee | $195.00 | $195.00 |
| Alabama | Ad Valorem Tax | $189.00 | $189.00 |
| Michigan | Registration tax | $178.00 | $160.20 |
| Louisiana | Registration fee | $60.00 | $60.00 |
| North Carolina | County value tax | Set by your county | Set by your county |
The spread is wide. Maine takes about $720 in the first year on that car, while Louisiana takes about $60. The last column shows the same car a year later, and in most states it is smaller: these charges follow the value down.
States where the county bills it separately
In these 6 states the yearly tax on the car comes as a separate county bill, so it is not part of the registration figure on the state page. What each state's own rules say:
- Arkansas. You assess the car with your county by 31 May each year at 20% of its value, then pay the county millage rate on that.
- Mississippi. The county ad valorem tax, a property tax on the car, is the largest part of a typical tag bill and is paid to the county at registration and at every renewal.
- Missouri. The car is assessed at one third of its market value and taxed at your local county, city and school rate, separately from the registration.
- South Carolina. The county property tax on the vehicle is billed separately and is not part of the registration figure.
- Virginia. The local "car tax" is a tangible personal property tax set and billed by your city or county, separately from the registration.
- West Virginia. The county bills a separate annual personal property tax on the car, and the DMV will not renew the plate until you show the receipt.
Why the bill shrinks every year
Almost every one of these taxes is tied to the value of the car, and they assume a car loses value with age. Several start from the original list price rather than what you paid, then apply a percentage that steps down each year until it reaches a floor. That is why buying a car that is a few years old can save more in yearly tax than the difference in price suggests, and why the first year after buying new is the most expensive one.
If your state is not on either list
Our figures come from what each state DMV or revenue department publishes. A few states leave car taxes entirely to cities or counties, and a purely local tax does not show up there. Before you assume you owe nothing, check your county assessor's site for a vehicle or personal property tax.
Can you deduct it?
Possibly, because a yearly tax based only on value is exactly what the IRS allows as a personal property tax deduction. The details, including why it is often worth less than it looks, are in are registration fees tax deductible.