The so-called "birthday tax" that Georgia vehicle owners pay will end in March 2013 – for people who purchase a new vehicle.
Vehicles purchased on or after March 1 and titled in the state will be exempt from sales and use tax and the annual ad valorem tax, according to the Georgia Department of Revenue.
Instead, due to the passage of House Bill 386, these vehicles will be subject to a new, one-time title ad valorem tax that is based on the value of the vehicle.
If you buy a new vehicle where you were paying sales tax on it, now it's called a title tax and is pretty much the same rate.
It's going to be 6.5 percent in 2013, 6.75 percent in 2014, in year three it will increase to seven percent and so on. However, you will not be paying the annual ad valorem tax on that new vehicle.
Another difference in the new law is that it will affect individuals who purchase a vehicle from another individual. The private sales that were traditionally exempt from being taxed will now be.
The tax is based on the fair market value of the vehicle at the time of the purchase or the sales price, whichever is higher.
You will continue to pay the annual ad valorem tax on vehicle(s) that you currently own.
To help residents understand the changes, Cherokee County Tax Commissioner Sonya Little said she will place an outline of the changes, answers to commonly asked questions and a link to the tax calculator on the agency's website.
Other aspects of the new law:
- The new title tax is based on a percentage (6.5 percent in 2013) of the fair market value of the vehicle, not the sales price, as determined by the Georgia Department of Revenue.
- If you purchase a vehicle in Georgia between January 1, 2012, and March 1, 2013, you have the option of paying the new title tax instead of the current annual ad valorem tax. You have from March 1, 2013, until December 31, 2013, to opt into the new program. Note: Vehicles purchased out-of-state are not eligible to opt in.
- All other existing annual vehicle registration requirements, including annual tag renewal fees, decals, and emission tests (if applicable), remain in effect for all vehicle owners.
Will the new Georgia tax affect your decision to purchase a new vehicle? Share your thoughts in the comments below.