Sales and Use Tax on Motor Vehicles

You just bought a car. Don’t forget a sales or use tax is due.

Overview

Sales tax is charged when you make a purchase in Massachusetts. Use tax is due when you make a purchase outside of Massachusetts and bring tangible personal property into the state for permanent use. 

Motor vehicle sales or use tax is due by the 20th day of the month following the purchase, use, storage, or any other consumption within Massachusetts.  

If you purchase a motor vehicle outside of Massachusetts and bring it into Massachusetts within 6 months for permanent use, a use tax is due by the 20th day of the following month when the vehicle entered Massachusetts.

For example, if you purchased a motor vehicle in New Hampshire on January 1st and brought it into Massachusetts on June 30, a use tax would be due by July 20th.

Keep in mind:

  • Generally, if you paid a sales tax of 6.25% or more to another state, you would not have to pay a use tax to Massachusetts. See TIR 03-1 for more information.
  • If you paid less than a 6.25% sales tax to another state and registered your vehicle, you would owe the difference to Massachusetts if the vehicle was brought into Massachusetts for permanent use within 6 months.

If you have possession or the title of a motor vehicle, you’re responsible for the sales or use tax to purchase, transfer, or use it.

The amount of sales and use tax assessed on casual sales (non-dealer sales) is based on the higher amount of:

  • The actual amount paid for the vehicle or
  • The clean trade-in value of the vehicle adjusted by either the high mileage adjustment (decreases value) or the low mileage adjustment (increases value).

The Registry of Motor Vehicles makes the proper adjustment for mileage at the time of registration. Adjustments to value based on the mechanical or structural condition of the motor vehicle are not provided for under current sales/use tax law. For example, if the car engine or doors need replacing, no adjustment will be made to the book value of the vehicle.

Vehicles sold with a salvage title exception

A salvage vehicle is any vehicle that has been determined by an insurance company to be a total loss due to fire, theft, collision, flood, or similar event and that has been issued a title stamped or otherwise labeled "salvage" by the Registry of Motor Vehicles. If a motor vehicle has been titled to the seller by the Registry of Motor Vehicles as a "salvage vehicle," the sales and use tax is computed on the actual amount paid by the purchaser.

Exemptions from Motor Vehicle Sales and Use Tax

There are a variety of reasons as to why you may be exempt from having to pay sales or use tax on your vehicle. Some of the most common are:

  • Family transfers 
  • Gifts
  • Out-of-state purchasers
  • Sales to an exempt organization
  • Transfers to or from a business entity
  • Transfers to a disabled person

If you feel you paid a sales or use tax in error you can request an abatement.  

Additional Resources

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