Here in Colorado we have a Specific Ownership Tax on cars. It is a property tax on cars based on 85% of the MSRP. Mrs. Cad just bought a new Tesla Y so in addition to the extra $50 charge for having an EV (in lieu of annual gas taxes I imagine) she had to pay over $1000 in property tax. AND this is going to be every year It slowly decreases so that next year the additional tax is about $720, then $570 then $430. So over the first 4 years of owning this car the state gouges her for over $2700 just for owning a car. And that is not registration, it is a tax even if you never register the car.
Half the states treat cars as taxable property.
1 New Jersey 0.00% $0
1 Illinois 0.00% $0
1 Vermont 0.00% $0
1 Wisconsin 0.00% $0
1 Texas 0.00% $0
1 New York 0.00% $0
1 Pennsylvania 0.00% $0
1 Ohio 0.00% $0
1 South Dakota 0.00% $0
1 Alaska 0.00% $0
1 Maryland 0.00% $0
1 Washington 0.00% $0
1 North Dakota 0.00% $0
1 Oregon 0.00% $0
1 Georgia 0.00% $0
1 Oklahoma 0.00% $0
1 Florida 0.00% $0
1 New Mexico 0.00% $0
1 Tennessee 0.00% $0
1 Idaho 0.00% $0
1 Utah 0.00% $0
1 Delaware 0.00% $0
1 District of Columbia 0.00% $0
1 Hawaii 0.00% $0
25 Louisiana 0.10% $25
26 Michigan 0.61% $154
27 California 0.65% $164
28 Alabama 0.69% $174
29 Iowa 1.00% $253
30 Arkansas 1.02% $257
31 North Carolina 1.20% $304
32 Montana 1.23% $312
33 Minnesota 1.29% $326
34 Indiana 1.38% $350
35 Kentucky 1.45% $366
36 Nebraska 1.57% $398
37 West Virginia 1.67% $423
38 Arizona 1.68% $425
39 Nevada 1.79% $453
39 Colorado 1.79% $452
41 New Hampshire 1.80% $455
41 Wyoming 1.80% $455
43 Kansas 1.93% $489
44 Massachusetts 2.25% $569
45 Maine 2.40% $607
46 South Carolina 2.50% $631
47 Connecticut 2.59% $656
48 Missouri 2.60% $659
49 Rhode Island 3.01% $762
50 Mississippi 3.46% $875
51 Virginia 4.04% $1,023
Is this a surprise, or otherwise noteworthy?
The Colorado tax rate is 2.1% in the first year, decreasing to 0.45% in the 5th year and a neglgible amount in the 10th year.
https://leg.colorado.gov/sites/default/files/r19-1383_update_sot_issue_brief.pdf
I’m not seeing anything remarkable here - some states charge full sales tax. If you buy a car new and keep it for 10 years you’re slightly worse off in Colorado, but in other cases you’re often better off in Colorado than a state that charges full sales tax.
The amount of $1000 was a hell of surprise. It is 2.1% of 85% of the MSRP so I guess the theory is if you can afford an expensive car you can afford an expensive tax.
This tax was in addition to the sales tax.
Ah, I didn’t realize that. Sales tax is another 2.9%?
When I bought my Tesla in 2018 they weren’t setup with tax information for all of the different localities in Colorado, so I paid about half of the owed taxes when buying the car, and the rest when registering.
I realized what had happened, so was expecting the big bill at registration time, but lots of other people getting Teslas here were very upset with the surprise bill. I can understand that, particularly if you have a loan, and now owe a bunch of sales tax that was not rolled into the loan, because it wasn’t in the “final” price that Tesla gave you.
On the flip side, when I was gifted my Dad’s old car, there was no sales tax. Vehicle transfers from a first degree relative are not taxed, and because the person on the title had the same last name as me, the DMV didn’t even require documentation, they just accepted it.
STATE sales tax is 2.9%. Counties and cities can add on to that. For example, if you buy a car in Denver, sales tax on your car is 8.81% of the purchase price. Luckily our county doesn’t have sales tax but our city does so Mrs. Cad paid 5.4% sales tax on her car.
Smatt restatement: if you live in Denver and buy a car, your sales tax is 8.81%. The sales tax is based on where you live, not where the purchase was made.
Are you going to get the new EV plates? We are.
Yeah. That’s why we paid our city’s tax rate, not the city where we bought it.
I teach paying car loans to my students so I’m so used to having them buy a car in Denver (virtually) knowing that behind the scenes that paying the 8.81% is based on them living in Denver, not on where the car lot is. But sometime scenarios are slightly inaccurate for the sake of simplification.
what’s this? Tell me more
To the OP, Washington used to have a property tax on cars, and I recall for me it was $600 or so a year (this was awhile ago, I’m sure it would be $1000 or more with current prices). We also paid sales tax, which is over 9% currently and wasn’t much lower then. We had a voter initiative that reduced the annual registration fee to $35 and prohibited any additional taxes. There have been some exceptions over the years that add on various things, but it’s never come close to the old way.
I hadn’t even heard of that. Maybe… I already have the sticker in my window.
I was thinking about getting the carbon neutral plate for my gas guzzler though. It requires donating donating $25 to the Colorado carbon fund, plus an extra $50 for the special plate.
I have bought and sold a buttload of car in Washington the past 40 years, I have never paid any kind of “property tax” on any of those vehicles. We paid an excise tax, that was generally the biggest part of the yearly licensing fee till additional taxes like RTA fees were added. Never paid anything close to $1000 either, my registration for licensing an 81 Monte Carlo in 1988 cost me only $49. My 62 Falcon in 1974 was only $11. I have saved all my registrations since I was in high school in the early 70’s.
BUT Washington also doesn’t have state income tax. When I lived there we all understood it was a pay-as-you-go system. This seems like taxes on top of taxes on top of taxes.
These replace that sticker, but I still don’t see many around.
So if you buy a car in Denver and keep it for 5 years, altogether you’re paying around 15% in tax. Their plan must be to encourage you to use the subway instead.
ETA: I was joking about how terrible public transportation is in most of the U.S., but I see Denver is actually pretty good.
Conceptually, I like the idea of replacing a one-time sales tax with a smaller annual tax that’s based on the approximate depreciating market value of the vehicle. It should make the market fairer for a consumer who is selling one vehicle to buy another. The way it works in my state is that you pay sales tax only on the net if you trade in your old vehicle. But to get that benefit you must purchase from a dealer and trade in the old vehicle with the same dealer.
That is exactly the case. The example in that table is nearly $500 on a $22,000 Camry so scale up according for a Tesla that costs approximately double that.
Yes, excise tax. Which is a type of property tax (in my mind anyway) They were based on a formula using the car’s value.
For most vehicles, the value is based on the manufacturer’s suggested retail price, gradually reduced depending on the age of the vehicle from 100% of value in the first year of service to 10% of original value for vehicles in their 13th or later years of service.
People complained about using the MSRP, since no one --in those days–paid the sticker price.
It was, for me anyway, hundreds of dollars.
Prior to the passage of Initiative 695, car tab fees were 2.2% of the value of the vehicle.
So, a $30,000 car would be $660. I think I paid about that for my car. The initiative was in 1999. Some people certainly had $50,000 cars at that time, and paid over $1,000 per year.