Vehicle Registration

Motor Vehicle “Birthday Tax” to Change to State and Local Title Tax

Tax reform legislation enacted by the Georgia General Assembly in 2012 created a new system for taxing motor vehicles registered in Georgia. As a result, the annual vehicle ad valorem tax, often called the “birthday tax,” will change to a state and local title ad valorem tax on March 1, 2013.

The change is part of HB386, which is designed to make Georgia more business friendly.  Beginning March 1, 2013, state and local sales tax will no longer apply to the purchase of a motor vehicle purchased in Henry County.  All vehicles purchased or transferred into ownership after this date will also no longer be subject to the annual ad valorem tax. Instead, these vehicles will be subject to a new, one-time state and local title ad valorem tax (TAVT) that is paid at the time owner registers the vehicle and applies for the title with the county.

“Every year, we renew our tags on our birthday.  House bill 386 does away with that,” said David Curry, Henry County Tax Commissioner.  “There are three parts of this bill for ad valorem taxes.  Imagine three doors.  The door on the left talks about if you own a vehicle prior to December 31, 2011, you will continue to get an ad valorem tax bill in the future.  The door on the right is for March 1, 2013 moving forward.  You will fall under the new system, and won’t have an option.  You will come in and pay your 6 ½ percent title fee and get your tag.  After that, you pay only $20 for your tag renewal.  The door in the middle is for the 14 months in the middle that people will have an option if they want to opt in to the new law or remain under the old law.”

The new system for taxing vehicles only applies when the ownership of the vehicle is transferred through a title exchange. All vehicles purchased on or after March 1, 2013 are subject to this new system, regardless of where the vehicle is purchased. Vehicles purchased through a private sale that were previously exempt from sales tax, such as vehicles that are sold between individuals and not through a dealer, will now be subject to the title ad valorem tax.

All other vehicle owners will continue to operate under the current system and pay the annual ad valorem taxes until they no longer hold title to the vehicle.

 “Currently,  if you purchase something from an individual, it’s $18 for a title and $20 for a tag, so for $38, you walk out the door, you’ve got your title and tag, and you are good to go,” said Curry.  “The new law captures the casual sales so that when you come in now, let’s say you purchased a car for $5,000.  We charge a 6 ½ percent title fee, which is $325 plus $20 for the tag.  So there is a huge difference in buying casual sales after March 1st, 2013 compared to today though, after the shock of the $325 up front, you won’t receive that ad valorem tax bill in the future.  So it’s a little harder on you up front, but it’s less of an impact on your pocketbook according to how long you keep your car.”

“This is a major change in the way taxes are paid on motor vehicles. People need to fully understand that the cost to title a vehicle is going to be higher than what they may have previously experienced,” said ACCG Legislative Director Clint Mueller. “The tradeoff is that they will not have to pay a sales tax if they have traditionally purchased a vehicle through a dealership and they will not have the annual ad valorem tax to pay every year.”

“There is a bit of a misconception out there that people think they have to pay 7 percent sales tax in addition to the 6 ½ percent title fee,” said Curry.  “The 6 ½ percent title fee does away with the 7 percent sales tax.   It’s a great savings to the citizens of Henry County and to all Georgia residents because in the future, you will not have to pay ad valorem taxes.  You pay the 6 ½ percent up front and simply pay $20 a year afterwards.”

For Henry County residents, your title ad valorem tax is collected by the county tax commissioner before a new title is issued and the vehicle is registered.  But don’t rush down to the tag office today to make any changes.

“We are not set up today to take that information or the money,” explained Curry.  “You’ll have to come in after March 1, 2013 to opt into the new system.”

The new title ad valorem tax is calculated at a rate of 6.5 percent of the vehicle’s value, not the sales price, as defined by the Department of Revenue’s motor vehicle ad valorem assessment manual. When there is no value available in the assessment manual, the bill of sale or a reputable used car market guide determines the value. The trade-in value of another motor vehicle will be deducted from the value to get the taxable value.

Other important changes that will go into effect on March 1, 2013 are as follows:

• Vehicles transferred from another state to Georgia will be subject to the title ad valorem tax in two installment payments, in addition to the title and registration fees that they were responsible for in the past.
• Leased vehicles will still be subject to a use tax on the monthly lease payment. The dealership is responsible for paying the title ad valorem tax and may include this cost in the term of the lease.
• Vehicle titles transferred between family members, including spouses, parents, children, siblings, grandparents or grandchildren, will be handled as follows:
• Vehicles owned prior to March 1, 2013: The family member who is titling the vehicle has the option to pay the full title ad valorem tax or continue to pay the annual ad valorem tax under the old system.
• Vehicles purchased on or after March 1, 2013: The family member who is titling the vehicle is subject to a 0.5% title ad valorem tax.
• Title applications must be processed in the county where the vehicle is to be registered.
• Salvage vehicles and vehicles donated to charities will pay a reduced title ad valorem tax at a rate of 1%.
• Certain veterans who were exempt from annual motor vehicle ad valorem tax will also be exempt from the title ad valorem tax.

The Georgia Department of Revenue (DOR) has developed a title ad valorem tax calculator to help people determine the amount of taxes they will owe that is available at:
http://onlinemvd.dor.ga.gov/Tap/welcome.aspx.  For more information on the new title ad valorem tax, go to www.etax.dor.ga.gov and click on “Motor Vehicles” and then the “Tax Calculator” button or www.accg.org and click on “Motor Vehicle Tax Reform.”

Renewals for Individuals

Renewal notices are mailed out approximately 60 days before your birthday. The decal must be displayed on your license plate by midnight of your birthday. The state Motor Vehicle Division contracts with a company to mail these notices to you. If you do not receive your notice, you may request one by contacting us. Please have your license plate number available.

Not receiving a notice does NOT eliminate the late fees if you renew after your birthday.

You may renew your registration in person at one of our offices.

Drop boxes are available at both locations. The McDonough office drop box is located by the outside door. The Stockbridge drop box is located by the drive thru window.

You may renew online or by mail to 164 Burke St., Stockbridge, GA 30281. Renewals submitted online and by mail are processed the same day they are received in our office.

You may now renew your license plate by telephone using your debit or credit card by calling 1-877-496-0249.  You must have your RIN number available and your current emissions and insurance information must be in the computer system.

Renewals for Businesses

Vehicle registration renewals for businesses have the due date determined by the first letter of the business name. The alphabetical schedule listed above shows the corresponding due date. Business registration expires the last day of the renewal month.

Special Decals

IN GOD WE TRUST decals are now available for $1.00.