Purchase and Use Tax is due at the time of registration and/or title at a percentage of the purchase price or the average trade-in value (NADA), whichever is greater, minus value of trade-in vehicle or any other allowable credit.
If the vehicle is currently registered/titled to you or your spouse or party to a civil union out-of-state, tax is based on NADA average trade-in book value, and is due unless exempted. (See Tax Exemptions below)
If you believe that the vehicle’s value is less than book value, you may submit a Vermont Dealer Appraisal Form.
If you are claiming tax credit for a vehicle registered to you or your spouse or party to a civil union out-of-state, please send a copy of the Registration Certificate in your name or your spouse’s or party to a civil union name and check the box in Section 6 of the application. You may be required to submit legal documentation that you and your spouse or party to a civil union were married or became party to civil union at the time the tax was paid out-of-state. You should also be prepared to submit documentation that the tax was paid and the amount of tax paid. Credit will be given for the purchase and use or sales tax paid on this vehicle to another jurisdiction. If tax paid on an out-of-state registered vehicle was equal to or more than the Vermont tax rate, no additional tax will be due.
The tax will be calculated by the dealer/leasing company. A lease agreement or Vermont Dealer worksheet must be submitted with documents. If the individual purchases this vehicle at the end of the lease, they will again pay tax on the vehicle.
The registration application is received from a Vermont Dealer or a Vermont Dealer acting on behalf of the Lessor. A "Purchase and Use Tax Computation - Leased Vehicle" form (TA-VD-147) may be submitted in lieu of a copy of the lease agreement and dealer worksheet.
|Calculation is as follows:||
original acquisition cost
(-) minus lease end value
(=) equals Purchase Price (amount which will be taxed)
A tax credit/refund may be available within 3 months prior to or after the purchase of a new vehicle.
A tax credit may be applied toward the tax due at the time of registration for a vehicle sold 3 months prior to the purchase. A tax refund may be applied for when a vehicle is sold within 3 months after the registration of a different vehicle. Call the Department of Motor Vehicles at one of the numbers listed (DMV Phone Numbers) for further information.
If submitting a dealer appraisal after the processing of your registration application, it must be received within 30 days of the registered date to be considered for a refund.
The following is a list of conditions that will allow you to register your vehicle exempt of payment of the Vermont Purchase and Use Tax:
- A vehicle owned or leased by Government (you will be required to submit proof of government ownership).
- Vehicle owned or leased by religious or charitable institution. These groups must submit the following documentation:
- A copy of Articles of Association and Statement of Purpose as filed with the Secretary of State.
- A copy of Internal Revenue Service form letter 947 which indicates that this group has been determined as exempt from federal income tax under section 501(a) of the Internal Revenue Code or copies of the IRS form letters 1045 and 1050 indicating that you are eligible as a 501(c)(3) organization.
A copy of Exemption Organization Registration Certificate for Vermont Sales and Use Tax or a letter from the Vermont Department of Taxes (signed by the Tax Department) stating that the organization has been granted exemption status from Vermont Sales and Use Tax as having 501(c)(3) status. Form S3 Resale and Exempt Organization Certificate of Exemption is not acceptable as it does not verify exemption status.
Note: The Articles of Association and Statement of Purpose would be used for requesting the tax exempt status from the Vermont Department of Taxes.
- Vehicle owned or leased by volunteer fire company (you will be required to submit proof that vehicle is used only by the fire department).
- Vehicle transferred to the spouse, party to a civil union, mother, father, stepmother, stepfather, son, daughter, stepson, stepdaughter, grandparent, or grandchild of the donor, or to a trust established for the benefit of any such persons or for the benefit of the donor, or subsequently transferred among such persons, provided such motor vehicle has been registered or titled and taxed in the name of the original donor. You will be required to submit a completed Gift Tax Exemption form. Note: A Gift Tax Exemption claim, when the title application reflects a lienholder, is subject to investigation by this Department.
- Vehicle registered and/or titled by the transferor and transferred between that person and a business entity controlled by the transferor, if the transfer is exempt under Section 351 of the United States Internal Revenue Code in effect July 1, 1966 (you will be required to submit a completed Tax Exemption - Controlling Interest form indicating the transfer is to a business entity in which the person has controlling interest (80%).
- Vehicle equipped with altered controls and owned and operated or titled by a permanently disabled person, certified exempt by the Commissioner - must submit statement of eligibility from the dealer stating the vehicle has been adapted. You will be required to submit an Application for Tax Exemption form signed by a physician certifying that the condition is permanent and that special controls are required.
- Vehicle equipped with a mechanical lifting device and owned by a permanently disabled person, certified exempt by the Commissioner (you will be required to submit a statement of eligibility from the dealer stating device installed and an Application for Tax Exemption form signed by a physician certifying that the condition is permanent and the device is required).
- Vehicle on which a state sales or use tax has been paid (in another state) by the person applying for a title/registration in Vermont. If the tax paid in another state is less than the Vermont tax, the tax due shall be the difference. You will be required to submit proof of tax paid. A copy of the retail installment agreement is not acceptable.
Vehicles previously registered out-of-state -
You may claim a tax credit for a vehicle registered to you for a period of 3 years or more in a jurisdiction that imposes a state sales or use tax on vehicles. you will be required to provide proof that the vehicle was indeed registered in a qualifying jurisdiction for at least 3 years. Examples of proof of registration are:
- Out-of-state Title (we will go by the title issue date).
- Registration Certificate(s) that show the vehicle was registered for 3 or more years.
- Letter from that state's motor vehicle department stating the vehicle has been registered there for 3 or more years.
Veteran Exemption (you will be required to submit a statement from Veterans Administration certifying exemption). Exemption is for one (1) vehicle or its replacement during any registration period.
Source: Vermont Statutes: TITLE 32 Taxation and Finance :
SUBTITLE 2 Taxation : PART 5 Special Taxes : CHAPTER 219. Motor Vehicle Purchase and Use Tax: § 8911. Exceptions.
The tax imposed by this chapter shall not apply to:
(14) a motor vehicle granted a veteran by the veterans' administration or a vehicle obtained as a replacement to one granted, when accompanied by a certificate issued by the veterans' administration center certifying the veteran to be entitled to the exemption;
For the full text of this statute please go to: Vermont Statutes and Court Rules on the State of Vermont's Legislative site.
- Rental Tax Exemption -Applies to a pleasure car, trailer (with loaded weight of 3000 lbs or less), truck and trailer coach (with loaded weight 26,000 lbs or less), when registered for use as a rental unit. Registrant or lessee must be licensed in Vermont as a VT Rental Company and will be required to submit a completed Rental Tax Exemption form TA-VD-30 (available from this Department). This vehicle is also classified as a Jitney and should be registered as such. Note: A Registration, Tax and Title Application must be completed.
- Vehicle registered and/or titled and transferred from an individual to, or in trust for the benefit of, a former spouse if the transfer is part of the divorce settlement and if the transfer takes place within one year after the date on which the divorce became final.