How Georgia’s New Car Sales Tax Works
Navigating Georgia's TAVT on a new car? See how taxable value is set and how trade-ins or rebates can lower the final amount you owe at the dealership.
Georgia’s approach to vehicle taxation is a one-time fee known as the Title Ad Valorem Tax (TAVT). This system consolidates all applicable state and local sales taxes into a single payment made when the vehicle is titled. It replaced the previous model of an annual ad valorem “birthday tax” and sales tax at purchase. The TAVT is assessed whenever ownership of a vehicle is transferred or when a new resident first registers their car in the state.
Calculating the Title Ad Valorem Tax (TAVT)
The foundation of the Title Ad Valorem Tax calculation is a statewide rate applied to the vehicle’s taxable value. The rate is 7.0%, but it is advisable to confirm the current percentage with the Georgia Department of Revenue as it can be adjusted by law. The tax is levied on the greater of two figures: the vehicle’s fair market value, as determined by the state’s official database, or the final negotiated selling price.
Several factors can reduce the vehicle’s taxable value, lowering the TAVT owed. The value of a trade-in vehicle is subtracted from the new car’s value before the tax rate is applied. Similarly, any manufacturer rebates or cash incentives offered by the dealer also decrease the taxable base.
To illustrate the calculation, consider the purchase of a new car with a final selling price of $40,000. If the buyer receives a $2,000 manufacturer rebate and has a trade-in vehicle valued at $10,000, these amounts are subtracted from the selling price. This lowers the taxable value to $28,000. Applying the 7.0% TAVT rate to this adjusted value results in a total tax of $1,960 due at the time of purchase.
The Payment Process for New Car Purchases
When purchasing a new vehicle from a licensed Georgia dealership, the TAVT payment is handled at the point of sale. State law mandates that the dealer is responsible for calculating and collecting the full TAVT amount from the buyer. This integrates the tax payment into the overall vehicle transaction, removing the need for a separate trip to a government office.
The calculated TAVT will appear as a distinct line item on the final bill of sale. Once collected, the dealer remits the tax payment, along with the necessary title application paperwork, to the appropriate county tag office on the buyer’s behalf.
After the purchase, the buyer is issued a temporary operating permit, or tag, allowing them to legally drive the vehicle while the official paperwork is processed. The permanent license plate and the official Certificate of Title are then mailed to the owner, or to the lienholder if the vehicle is financed.
Special Circumstances and Exemptions
For a new lease, the TAVT is based on the sum of all lease payments plus any down payment. This tax can be paid upfront when signing the lease or capitalized into the monthly payments.
A transfer between immediate family members like spouses, parents, children, siblings, or grandparents is subject to a reduced TAVT rate of 0.5% of the vehicle’s fair market value. To qualify, the parties must complete an Affidavit to Certify Immediate Family Relationship, and the vehicle must have already been in the TAVT system.
Individuals who purchase a car in another state before establishing residency in Georgia must register the vehicle within 30 days. Upon registration, they are required to pay a reduced TAVT rate of 3% of the vehicle’s fair market value.
Under the federal Servicemembers Civil Relief Act, non-resident, active-duty military personnel stationed in Georgia are exempt from TAVT but are still subject to state sales and use tax. Georgia allows these service members to choose to pay either the standard sales tax or the TAVT, whichever is lower. This option does not apply to leased vehicles.