What Is the DC Vehicle Excise Tax and Who Pays It?

The District of Columbia vehicle excise tax is a one-time assessment imposed on a vehicle when it is first titled in the District, separate from annual registration fees. This tax applies to most new, used, or out-of-state vehicles being titled for the first time in DC. The payment is a prerequisite for receiving a DC Certificate of Title and is a part of the broader vehicle titling process.

Determining if the Tax Applies to You

The obligation to pay the DC vehicle excise tax is triggered by specific circumstances. The most common scenarios are purchasing a new or used vehicle to be registered in DC or moving to the District with a vehicle previously titled in another state. In both cases, the act of applying for a DC title for the vehicle makes the tax due. This also applies to vehicles received as gifts, where the new owner must formally title the vehicle in their name.

Calculating the Excise Tax Amount

The DC vehicle excise tax is based on the vehicle’s fair market value and a percentage rate determined by its characteristics. The fair market value is the purchase price on the bill of sale. For gifted vehicles or those brought by new residents, the value is determined using a standard industry source like the National Automobile Dealers Association (NADA) Business Guide.

The tax rate is set by a tiered system considering the vehicle’s unladen weight and its city fuel efficiency in miles per gallon (MPG). The Motor Excise Tax Amendment Act of 2024 revised these rates, with changes taking effect on February 17, 2025. The rates are structured to increase for vehicles that are heavier and less fuel-efficient. This legislation also repealed the previous exemption for electric vehicles, which are now taxed based on their unladen weight.

For example, a vehicle valued at $30,000 that weighs 4,000 pounds with a city MPG of 22 would fall into a specific tax bracket. If that bracket’s rate is 5%, the excise tax would be $1,500.

Available Exemptions and Credits

Certain vehicle owners may qualify for exemptions or credits that reduce or eliminate the excise tax. While the broad exemption for all-electric vehicles was repealed in 2025, other specific exemptions remain. Vehicles transferred between spouses or domestic partners are exempt from the tax. This allows for ownership changes within a family unit without incurring the tax.

Another exemption applies to vehicles received through inheritance. A person who inherits a vehicle can usually title it in their name without being subject to the excise tax, provided they submit the proper documentation. Additionally, certain commercial vehicles, such as those owned by rental companies, may have different tax treatments.

A notable credit is available to individuals who qualified for and claimed the District Earned Income Tax Credit (EITC) for the most recent tax year. These individuals may pay a rate based on the older weight-class system or the new MPG-adjusted schedule, whichever is lower. To receive this benefit, the owner must provide documentation from the DC Office of Tax and Revenue.

The Payment and Titling Process

Payment of the vehicle excise tax is made during the titling process at a DC DMV service center. The owner must complete a Certificate of Title Application, which is the official request to have the vehicle legally titled in the District.

Several other documents are necessary to complete the transaction.

• The original bill of sale to verify the purchase price
• The original out-of-state title for vehicles previously titled elsewhere
• Proof of a valid DC vehicle inspection
• Proof of DC insurance

A DMV representative will calculate the final excise tax along with other fees, such as for the title and registration. The DC DMV accepts various payment methods, including credit cards, checks, money orders, and cash. After payment, the DMV processes the application and issues a new DC Certificate of Title and registration.