Tax Information - Motorcycles: Sales Tax On Street-Legal And Off-Road Vehicle printable pdf download

Tax Information

Susan Combs

Texas Comptroller of Public Accounts

February 2012

MOTORCYCLES:

Sales Tax on Street-Legal and Off-Road Vehicles

Off-Road Vehicles

The amount and type of tax due on motorcycles, all-

terrain vehicles (ATVs) and utility vehicles is deter-

Off-road vehicles are self-propelled vehicles designed for

mined by whether the vehicle is street-legal or designed

off-road (i.e., not on public streets and highways) use.

for off-road use. Motor vehicle tax applies to street-legal

Examples include dirt bikes, mini bikes or mini motor-

vehicles. Sales and use tax is due on off-road motor-

cycles, all-terrain vehicles (ATVs), utility vehicles and

cycles, ATVs and utility vehicles.

other vehicles not designed or intended by the manu-

facturer to meet motor vehicle registration and safety

Street-Legal Vehicles Designed for

inspection standards.

Highway Use

Off-road vehicles are subject to sales tax, not motor

Street-legal motorcycles designed for highway use are

vehicle tax. The sales and use tax statutes are found in

taxed at 6.25 percent state tax only. There is no local

Chapter 151 of the Texas Tax Code. The state sales and

tax on motor vehicle sales. The motor vehicle tax stat-

use tax rate is 6.25 percent. Off-road vehicles are also

utes are found in Chapter 152 of the Texas Tax Code.

subject to applicable local sales or use taxes up to 2 per-

cent. Dealers are responsible for collecting the state and

County tax assessor-collectors collect motor vehicle

local taxes from purchasers and remitting those taxes to

sales tax at the time of vehicle titling and registration.

the Comptroller.

The tax base is the total consideration paid for the

vehicle less an allowance for a motor vehicle traded in

The Tax Code treats street-legal and off-road vehicles

and accepted by the seller as part of the consideration

differently with regard to charges for the dealer’s VIT

for the motor vehicle sold.

and the documentary fee charged for the handling of

registration and titling the vehicle. These taxes and fees

The total consideration paid for a motor vehicle does

are part of the taxable sales price of off-road vehicles.

not include a charge for motor vehicle inventory tax

Dealers are responsible for collecting the state sales and

(VIT) or a documentary fee charged for handling reg-

local taxes on the VIT and documentary fees charged

istration and titling. The VIT is a local property tax on

in connection with the sale of an off-road vehicle. The

the motor vehicle dealer’s inventory excluded by Texas

sales price does exclude the value of a trade used to

Tax Code Section 152.002. A documentary fee is con-

reduce the selling price of a taxable vehicle, provided

sidered a nontaxable charge occurring after the sale.

it is a type of property sold by the seller in the regular

course of business.

98-805 (02/12)

Tax Information - Motorcycles: Sales Tax On Street-Legal And Off-Road Vehicle

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