Property Tax on Cars in North Carolina

In North Carolina, owning a vehicle comes with an annual property tax obligation. This is a local tax, meaning the funds support services like public schools and law enforcement in the county and city where your vehicle is registered. Unlike a one-time sales tax, this is a recurring tax based on the vehicle’s value and is tied directly to your vehicle’s registration for a streamlined payment process.

Understanding the Tag & Tax Together System

North Carolina simplifies the payment of annual vehicle registration fees and property taxes through its “Tag & Tax Together” program. This system combines these two separate obligations into a single bill, eliminating the need for vehicle owners to make separate payments. The North Carolina Division of Motor Vehicles (NCDMV) and the 100 county tax offices across the state collaborate to administer this program.

Vehicle owners receive one consolidated renewal notice in the mail approximately 60 days before their registration expires. This notice clearly itemizes both the state-mandated registration renewal fee and the locally assessed vehicle property tax. After you pay the combined bill, the NCDMV retains the registration fee and forwards the property tax revenue directly to the appropriate county. The tax amount itself is not determined by the NCDMV but by the tax assessor in the county where the vehicle is registered.

How Your Vehicle Property Tax is Calculated

The calculation of your annual vehicle property tax involves two main components: the vehicle’s assessed value and the local tax rate. The NCDMV determines the taxable value of your vehicle using a uniform statewide schedule that considers the vehicle’s model and age. This valuation is not based on retail book values or private-party sale prices. The value of your vehicle for tax purposes depreciates each year as it gets older, meaning the property tax you owe on a specific vehicle will decrease over time.

The second part of the calculation is the tax rate, which is not a single statewide rate. Each of the 100 counties, along with its municipalities, sets its own property tax rate annually based on budget needs. Your total tax rate is the sum of the rates for your specific residential address. The final tax bill is calculated by multiplying the vehicle’s assessed value by this combined local tax rate. For example, if your vehicle is valued at $20,000 and your combined local tax rate is 1%, your property tax due would be $200.

The Annual Payment and Renewal Process

The payment process begins when you receive the combined “Tag & Tax” notice from the NCDMV. Before you can pay the notice, your vehicle must pass its required annual safety inspection and, if applicable in your county, an emissions inspection. These inspections must be completed no more than 90 days before the registration expires.

Once the inspection is successfully completed and recorded, you can proceed with payment. The combined notice requires a single payment to cover both the property tax and the registration fee, and you cannot pay one without the other. Payment can be made online through the NCDMV portal, by mail, or in person at any NCDMV license plate agency. Upon successful payment, your vehicle’s registration is renewed for another year, and the registration card you receive serves as the official receipt for the property taxes paid. Completing this process before the expiration date is necessary to avoid interest charges on the tax portion and a separate late fee for the registration renewal.

Prorated Refunds for Sold or Out-of-State Vehicles

Vehicle owners in North Carolina may be eligible for a partial refund of property taxes if they dispose of the vehicle or move out of state before the registration period ends. To be eligible, you must surrender your North Carolina license plate to the NCDMV. The refund amount is calculated based on the number of full calendar months remaining in the registration year after the plate is turned in.

To apply for the refund, you must submit documentation to the tax office in the county where the taxes were paid within one year of surrendering the plate. The required documents include the Receipt of Tag Surrender (Form FS-20) and proof of the vehicle’s disposition, such as a bill of sale or a new out-of-state registration. If you transfer your license plate to another vehicle, you are not eligible for a tax refund; the taxes paid are credited toward the new vehicle’s registration.

Tax Exemptions and Valuation Appeals

North Carolina law provides property tax relief through exemptions and a formal appeal process. Exemptions that can reduce or eliminate the tax are available for certain disabled veterans and for vehicles classified as antique automobiles, which are those 30 years or older. To receive an exemption, the owner must apply through their local county tax office and meet the specific requirements.

If you believe the NCDMV has overvalued your vehicle, you can appeal its assessed value. The appeal must be filed with the county tax assessor within 30 days of the tax bill’s due date. You are still required to pay the tax bill in full by the due date while the appeal is pending; if your appeal is successful, you will receive a refund for the overpayment. To support a valuation appeal, you must provide evidence that the vehicle’s market value is lower than the assessed value. This could include documentation of high mileage, proof of significant unrepaired damage, or a recent certified appraisal. Citing wholesale or private-party “blue book” values is not sufficient grounds for a successful appeal, and the process begins at the local county level.