A USDOT University Transportation Center

Vehicle Ownership Taxes

In the state of Texas, there is a motor vehicle tax rate on all purchases of motor vehicles.1 Currently, the ownership tax is 6.25% of the sales price.2 The taxes have been placed to finance any roadway construction that needs to be paid for, as well as other vehicle-related issues. Vehicle ownership taxes are applied in both public and private purchases of a vehicle.3

Considering this strategy will help achieve the goal of the following objectives

  • Less Contamination
  • Less Emissions
  • Less Traffic Noise
  • Connectivity and Inclusion
  • Healthy Destinations
  • Less Traffic Violence
  • Active Transportation
  • Green Space

Transportation lifecycle phases

This strategy is associated with the following transportation lifecycle phases:

  • Construction
  • End of Life
  • Maintenance
  • Material Selection
  • Operations
  • Policy and Planning
  • Project Development

Who's involved

  • Car owners
  • Policymakers
  • State governments
In the state of Texas, there is a motor vehicle tax rate on all purchases of motor vehicles.1 Currently, the ownership tax is 6.25% of the sales price.2 The taxes have been placed to finance any roadway construction that needs to be paid for, as well as other vehicle-related issues. Vehicle ownership taxes are applied in both public and private purchases of a vehicle.3

How it Helps

Implementing vehicle ownership taxes can potentially limit vehicle purchases, thus reducing car emissions and traffic-related noise levels. This can also contribute to funding for road operations and maintenance activities, leading to safer roadways and decreased risk of accidents.

Implementing

Education:

Vehicle ownership taxes are heavily focused on the state level. In order for the tax payers to be supportive of this additional tax, city officials must do their best to inform and educate drivers why the tax is in place and how it impacts them.

Type of Vehicle:

Vehicle taxes can vary based on the type of fuel, whether it is gasoline- or battery-fueled. In many states, electronic vehicles have higher tax rates than their gasoline-based counterparts.5 This is something that will impact how federal and state governments implement these taxes as electronic vehicles become more popular.

Examples

1) Bell County, Texas Taxes

This link gives Bell County, Texas as a real life example if how vehicle ownership taxes work for new vehicle owners.

https://www.bellcountytx.com/county_government/tax_assessor-collector/registration.php#regfees

1. Texas Department of Motor Vehicles. Standard Presumptive Value. https://www.txdmv.gov/standard-presumptive-calculator
2. Comptroller. Motor Vehicle—Sales and Use Tax. https://comptroller.texas.gov/taxes/motor-vehicle/sales-use.php
3. Car and Driver. Texas Car Sales Tax: Everything You Need to Know. https://www.caranddriver.com/research/a31552230/texas-car-sales-tax/
5. Plungis, J. (2019). More States Hitting Electric Vehicle Owners With High Fees, a Consumer Report Analysis Shows. Consumer Reports. https://www.consumerreports.org/hybrids-evs/more-states-hitting-electric-vehicle-owners-with-high-fees/