Changes to car tag tax to take effect March 1

There are changes in store for those who purchase a vehicle in Georgia. Buying a vehicle here means you’ll no longer pay sales tax or the annual so-called “birthday tax.” Instead, car buyers will pay a one-time title tax.


This year, the new title tax fee will be 6.5 percent of the value of your vehicle. Next year, that fee rises to 6.75 percent and then in 2015, to 7 percent.


House Bill 386, which goes into effect March 1, replaces the state’s sales tax and the annual “birthday tax” on vehicles purchased and titled in Georgia.


Brent Bennett, director of vehicle registration in the DeKalb County Tax Commissioner’s Office, said the new law is generating a lot of questions from consumers and DeKalb is covering its bases to get the word out. DeKalb Tax Commissioner Claudia G. Lawson is including an insert with March tag renewal notices that spell out how the new tax will work and staff members are providing information to those who call or visit the office, Bennett said. The county also is advertising the changes in local newspapers.


“It’s a very complex law with many aspects,” said Bennett. “Typically, people don’t really pay attention to things, unless it directly affects them. We’re trying to make sure people know how the new law will work. ”


Officials say it is important to note that some vehicle owners will not be impacted by the new tax fee. For example, those who haven’t purchased a car will continue to pay the “birthday tax” on vehicles they currently own. Exemptions also will remain in tact for veterans such as those who have earned Purple Hearts or were Prisoners of War. These veterans currently don’t and won’t pay any tag taxes.


In Rockdale, residents were invited recently to attend a “Tax Talk” to learn more about HB 386. Rockdale Tax Commissioner RJ Hadley said that he is planning to host a series of talks on the subject.


“It’s important that people know the different options they have under the new law,” said Hadley, adding that he is especially concerned about buyers making “casual sales” transactions with non-dealers.


Casual sales work like this: Someone buys a $5,000 car from an individual on March 2. The Georgia Department of Revenue, however, determines the car is actually valued at $7,000. The buyer would be required to pay a title tax fee of 6.5 percent on $7,000—not $5,000—in order to get the car registered and titled in Georgia. The title tax fee would be paid to the county tax commissioner’s office—not the individual selling the car. However, if the vehicle is purchased from a dealer, the dealer charges the new title tax instead of sales tax and makes the payment to the county, Hadley said.


“The dealers will file the information and payment electronically. Those private individuals may think they only have to pay the title tax on what they actually paid for the car, but the value is determined by the Georgia Department of Revenue and some of those buyers are going to get bitten,” Hadley said.


Gwinnett Tax Commissioner Richard Steele has used the internet to try and get the word out. The commissioner has a summary of the new tax and other information on the county’s web site.


Those who bought a vehicle in Georgia between January 1, 2012, and March 1, 2013, (when the new program begins) have the option of paying the new title tax instead of the annual birthday tax. Car buyers have from March 1, 2013 until December 31, 2013 to opt into the new program. Fees will be adjusted for those who already paid the birthday tax this year, but decided to opt into the new program before the end of the year.


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 whether they pay the new tag tax fee or the birthday tax.

Know Before You Go

The Georgia Department of Revenue has developed an ad valorem tax calculator to help people determine the amount of taxes they owe. The calculator is available at: