What Is the Title Ad Valorem Tax on a Vehicle?

The Title Ad Valorem Tax, or TAVT, is a one-time tax paid when a vehicle owner receives a title. In states that have adopted this system, it replaces other taxes, such as sales tax and the annual property tax that vehicle owners previously paid with their registration renewal. This simplifies vehicle taxation into a single payment made at the time of titling. The TAVT is required each time ownership of a vehicle is transferred.

Calculating the Tax Amount

The basis of the Title Ad Valorem Tax calculation is the vehicle’s fair market value (FMV), as established by the state’s Department of Revenue. For new vehicles, the FMV is the greater of the retail selling price or a value from the state’s motor vehicle assessment manual. For used vehicles, the value is derived from a designated used car market guide.

The tax owed is found by multiplying the vehicle’s FMV by the current TAVT rate, for example, 7.0%. The basic formula is: Vehicle’s Fair Market Value x TAVT Rate = Tax Owed.

The value of a trade-in vehicle can lower the taxable amount. When a vehicle is purchased from a dealership and another vehicle is traded in, the trade-in value is subtracted from the new vehicle’s FMV before the tax is calculated. For example, if a car with an FMV of $30,000 has a $10,000 trade-in, the TAVT is calculated on $20,000. This reduction only applies to dealer purchases, not private sales.

Events Triggering the Tax

Purchasing a Vehicle

The most common event that triggers the TAVT is the purchase of a new or used vehicle. This applies whether the vehicle is bought from a dealership or a private individual, with the tax due as part of the titling process.

Moving as a New Resident

Individuals moving into a state with a TAVT system must pay the tax to register and title their vehicles. New residents are granted a specific timeframe, often 30 calendar days after establishing residency, to complete this process. In many cases, new residents pay a reduced TAVT rate, such as 3%.

Gifts, Inheritances, and Leases

Receiving a vehicle as a gift or through an inheritance also triggers the tax, often at a reduced rate. For instance, inheriting a vehicle from an immediate family member where TAVT was previously paid may have a rate of 0.5% of the vehicle’s fair market value. This requires a specific form, like an Affidavit to Certify Immediate Family Relationship. For leased vehicles, the TAVT is calculated based on the vehicle’s value at the start of the lease agreement.

Required Information and Documentation

Before paying the tax, a vehicle owner must gather several documents. The primary form is the state’s title and tag application, such as Georgia’s Form MV-1, which requires specific vehicle and owner details. Other required documentation includes:

• Proof of ownership, which can be the Manufacturer’s Certificate of Origin for a new car or the existing title and a Bill of Sale for a used car.
• A valid driver’s license or state-issued identification card to verify both identity and residency.
• Proof of current vehicle insurance that meets the state’s minimum liability requirements.

The Payment and Titling Process

The final step is to visit a local County Tag Office to submit the application and pay the tax. Presenting the completed package to a clerk formalizes the ownership transfer and initiates the creation of a new title in the owner’s name.

Payment for the TAVT and any associated fees is due at this time. Most tag offices accept various forms of payment, including credit cards, checks, and cash, but it is best to confirm accepted methods with the county office beforehand.

After payment, the owner receives a receipt and a temporary operating permit. This temporary tag allows the vehicle to be driven legally while the official title is processed and mailed to the owner or lienholder within a few weeks.