It may have slipped under your radar this year, but the vehicle ad valorem tax is coming to an end in Georgia. A bill was passed earlier in 2012 that, once effective in 2013, will combine vehicle sales tax with the ad valorem tax resulting in a new “title tax.” You only pay this once, at the time of purchase. And then there will be no yearly birthday tax (ad valorem tax) due. The title tax will be due on all new and used cars purchased after March 1, 2013. Purchasers of vehicles in 2012 will have the option to continue to pay the ad valorem tax as everyone has up until this point, or they may opt for the new title tax.
The title tax will be based off of a percentage of the fair market value of the purchased vehicle, less any trade-in value of another vehicle, which may differ from the purchase price of the vehicle. For 2013 the tax will be 6.50% of the fair market value less any trade-in value, 6.75% in 2014, and 7.00% from 2015 forward – with a provision to be raised to 9% if deemed necessary to meet revenue projections. People who move to Georgia will also be required to pay this tax when registering their vehicle in Georgia. 50% of the tax will be due when registering, and the remaining 50% will be due within 12 months.
The longer that an individual maintains ownership and title of a vehicle, the more beneficial this legislative change will likely be to them. If you purchase a vehicle every few years, this change may be less beneficial to you or it may actually be detrimental. The greatest savings will likely come to those purchasing new vehicles. Prior to March 1, 2013, new car purchasers would pay sales tax and yearly ad valorem taxes. Purchasers after March 1, 2013, will only pay a one-time title tax (similar in percentage to the prior sales tax), and no sales tax or yearly ad valorem taxes.
John Robert Voynich, CPA