New Vehicle Tax To Go Into Effect

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Motor Vehicle Tax To Go Into Effect
Kristen Ross

Texas law is changing how to calculate the motor vehicle tax on private party purchases. Currently in the state, tax on vehicles purchased from an individual is calculated based on the actual sales price provided at the time of the title transfer.

Effective October 1st, several new factors will determine the amount of tax to be paid on a used vehicle purchase.

"Take the bluebook value of that vehicle based on its year, make, and mileage, and compare this actual sales price with 80% of that bluebook value. And which ever of those numbers are higher, that's what the individual is going to be paying the sales tax on," said Kristeen Roe, Brazos County Tax Assessor-Collector Chief Deputy.

According to Roe, special circumstances will be made for buyers and sellers who feel their vehicle is worth less than 80% of the bluebook value. "They can within 20 working days of purchase of the vehicle go to either a licensed dealer or a licensed insurance appraiser and get an appraisal. And that appraisal can be utilized in lieu of the bluebook price," said Roe.

The new law may inconvenience the buyer of a used vehicle, however, the legislation is part of an education tax reform package which is set to benefit the public school system.

Roe said, "The difference between the actual taxes on the sales price and the taxes on the 80% of the bluebook or presumptive value. The difference in that tax amount is what is going to be dedicated to the school".

College Station ISD Deputy Superintendent Mike Ball said this bill, along with four others passed during the last legislative session, will benefit Texas schools.
He said with increased school funding, property taxes could be reduced more than 10 percent.