New vehicle tax begins March 1

Attention car owners: A new Georgia vehicle tax starts March 1.

Called the Title Ad Valorum Tax (TAVT), it replaces the sales and annual ad valorem tax, nicknamed the “birthday tax,” on newly purchased vehicles.

“It’s for all vehicles that are titled,” said Brent Bennett, director of the motor vehicle division for the DeKalb County Tax Commissioner’s Office. “The basic premise is the elimination of the ad valorum tax.”

Beginning March 1, every time a vehicle is purchased or there is a title transfer of any type, the TAVT must be paid by the new titleholder.

In 2013, the one-time tax is 6.5 percent of the vehicle’s state valuation which is based on a combination of the retail and wholesale values. The tax rate goes up to 6.75 percent in 2014 and 7 percent in 2015. After 2015, the Georgia General Assembly has the option of increasing the tax up to 9 percent.

The state’s valuation, may be different from what the purchaser paid for the vehicle, Bennett said.

“You may have a bill of sale that says $2,500, but the state may say it’s worth $5,000,” Bennett said.

Vehicle owners can opt in to the TAVT under two circumstances.

For vehicles purchased between Jan. 1, 2012, and March 1, 2013, the new owners have the option of paying the annual ad valorum tax or the TAVT. However, the vehicle must have been purchased in Georgia.

Another way to opt in to the TAVT is by a title transfer to a family member.

For example, if a father gives a son a vehicle, currently it is on the ad valorum system. After March 1, the owner son has the option of paying a 0.5 percent fee to remain on the ad valorum system or just paying the 6.5 percent TAVT, Bennett said.

To opt into the TAVT, the transferor and transferee must complete an affidavit affirming that they are immediate family members.

The benefit of the TAVT is that “you won’t pay any more ad valorum taxes,” Bennett said. Instead, vehicle owners will only be required to get an emissions test and pay the annual tag fee.

For car purchases through dealers, the TAVT will be rolled into the purchase price, but for “casual purchases”—those from an owner—the tax must be paid in a lump sum to get the title, Bennett said.

“Some people will like that, but it could be an economic hardship for some people,” Bennett said.

At 6.5 percent, the TAVT on a vehicle with a state valuation of $5,000 is $325. Over five years, a vehicle owner choosing not to opt in to the TAVT would pay approximately $546, according to the TAVT calculator on the website of the Georgia Department of Revenue.

New residents moving into the state will be required to pay the TAVT but will have the option of paying 50 percent of the fee up front and the rest within a year, Bennett said.

Under the ad valorum tax system, counties received 99.75 percent of the tax proceeds while 0.25 percent went to state government, Bennett said. At the county level, the funds were divided between the county government and the school district.

In 2013, the state will get 57 percent of the TAVT, while the county receives 43 percent. Next year, the breakdown will be 55 percent for the state and 45 percent the county. In 2021, the state will receive 30 percent and the county will get 70 percent.

Bennett said the county tax commissioner’s office is expecting a significant increase in transaction time for customers when the new tax begins.

“Wait time is going to increase substantially,” Bennett said. “There’s no doubt about it.”

More information about the tax and an online calculator to estimate the tax for a particular vehicle can be found on the Georgia Department of Revenue website at

http://onlinemvd.dor.ga.gov/Tap/welcome.aspx.