Title tax replaces 'birthday tax' starting Mar. 1

10:05 AM, Jan 29, 2013   |    comments
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The title ad valorem tax will replace the annual ad valorem tax on vehicle purchases after March 1st.

ATLANTA -- Georgia drivers will see a new tax on all vehicle purchases, leases and trades starting on Mar. 1.

The title ad valorem tax will replace sales taxes on vehicles and the annual ad valorem tax, known as the "birthday tax."

RELATED | An Overview of the new Title Ad Valorem Tax

The new tax will start at 6.5 percent of the vehicle's value. It will go up to 6.75 percent in 2014 and 7 percent in 2015. 

It applies to anyone who buys, leases or trades a car.

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"They have to pay it when they get their title and registration," said Clint Mueller, Legislative Director for the Association County Commissioners of Georgia. "Before they can drive that car on the road, they have to have a tag. Before they can get that tag, they have to pay the tax."

Mueller and the ACCG are conducting training on the title tax for county tax commission offices across Georgia.

RELATED | Answers to Frequently Asked Questions

The tax covers new and used cars, whether they're sold by a dealer or private seller. 

"If I go buy your car, and I show up to get my registration for the vehicle, I'm going to be asked to pay 6.5 percent of basically the blue book value of that car," Mueller said. 

After Mar. 1, buyers won't pay sales taxes for cars.

Once owners pay the title tax, they won't be charged the annual ad valorem tax, also known as the birthday tax.

"This is going to be roughly equivalent to and initially a little less than what you would have paid in sales tax," Mueller said. 

The new tax becomes mandatory in March, but anyone who bought a car last year or buys one in the first two months of this year can opt-in to the new system and get credit for any sales taxes already paid.

They have until the end of 2013 to decide and visit their local tax commissioner's office.

"If they don't hold their car, they may possibly pay more under this system," Mueller said. "But people who buy through a dealership and hold their cars for say, more than five years, will probably fare better under this system."

The birthday tax will not go away for everyone. Drivers won't fall under the new system until they buy, lease or trade a car.

"Anybody that owns a car prior to January 1st of last year, no change," Mueller said. "You'll continue to pay your annual property tax. You stay under the old system."

Here's one more big change: anyone who moves into Georgia from out of state will have to pay the title tax on any car they register here, and that could really add up.

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