Have you ever wondered why so many people register their cars in Montana? The short answer is that Montana does not charge sales tax on cars. But there is a lot of confusion among people regarding the procedures and legality of registering vehicles in Montana.
This article aims to clear out common misconceptions and give you an idea about Montana’s sales tax on cars. Apart from sales tax, we will also discuss other expenses not included in the sticker price when buying vehicles in Montana.
Montana Car Tax: Overview
There is no statewide car tax in Montana. More specifically, most counties do not impose a sales tax on cars.
Purchasing a car may be costly, especially when insurance, inspections, and tax payments are not included in the retail price, and you have to pay these separately. But Montana residents are lucky because Montana does not levy a state sales tax on the sale of any automobile.
Montana Local Sales Tax On Cars
Montana has no statewide sales tax for automobile purchases. But that doesn’t mean you don’t have to pay car sales tax. Some counties impose a local state tax, but the good news is that Montana’s average total sales tax rate is just 0.002%.
Powder River, Richland, and Sheridan counties have the highest taxes in Wyoming. Despite living in a state without a general sales tax, citizens pay a 5% rate for their car sales.
Montana County Vehicle Tax
While Montana does not charge a state sales tax on cars, counties can impose a vehicle tax depending on the value of all new vehicles, trucks, and SUVs. Automobiles licensed within their current model year are valued at 90% of the MSRP.
But vehicles purchased a year before their model year (for example, 2011 MY cars registered in 2010) are rated at 100% of their MSRP. This ‘local option’ motor tax cannot exceed 0.7%.
Calculating Montana Sales Tax On A Car
Calculating the sales tax for your car is simple. Your primary address will be the one you use for vehicle registration. So you only have to consider the primary address’s county sales tax. Make sure you don’t use the state sales tax instead.
First, go through your dealership’s county website. Then find the local tax rate and add it to the car’s purchase price. Often, this will not be applicable as there is no local tax in most counties in Montana.
How To Register Vehicles in Montana?
There are companies in Montana that are entirely committed to assisting consumers to avoid sales taxes on exotic cars and pricey recreational vehicles.
Here’s a quick run-down of the process.
- You hire a Montana LLC formation firm.
- They will form an LLC for you and charge a fee.
- Then they register your automobiles in Montana under the newly-formed LLC.
You don’t have to travel to Montana to register your vehicle. The attorney will go to the Montana Department of Motor Vehicles on behalf of you. You can acquire your license plates and tabs in the mail. Moreover, Montana has no standards for car inspections or emission tests.
Benefits of Having a Montana LLC
The benefits of registering a vehicle through a Montana LLC are undoubtedly tempting. It can save you a lot of money on sales tax and keep your personal information anonymous. But should you go for it?
It boils down to understanding the laws governing the purchase, registration, and use of vehicles in your state of residence. It is lawful for people in all states. Nevertheless, where you live and use your moveable assets are vital considerations.
Certain states limit their residents’ vehicle usage in their states and enforce penalties for law violations. However, this will depend entirely on your state of residence. For example, California has no jurisdiction over someone driving a vehicle registered in another state.
So you must have a good idea of different state legislation if you plan on regularly using your Montana-registered car in other states. However, if you do not know much about the state legislation, Montana LLC services have experts who can guide you through it.
The Costs of Owning a Car in Montana
One of the most detested aspects of purchasing a car is the additional licensing and registration costs you must pay. These costs are often termed “tag, title, and tax” expenses.
Depending on where you reside in Montana, these costs can range from $30 to $300. The cost may not be considered expensive for some. However, Montana generously provides automobile owners with cheap licensing and registration choices.
Montana also offers a one-time, flat-rate price for car owners, but only if the vehicle is over 11 years old. Renewal and registration choices for owners of newer vehicles vary from one to another, but you can normally anticipate paying a substantially reduced amount compared to other states.
Montana State might not impose a state sales tax, but unfortunately, that’s not the case regarding registration fees. In Montana, the registration charge for a $23,407 car is $153. When you include a 0.16% personal property tax, the overall cost becomes $190.45.
Besides registration fees, you’ll have to pay a hefty amount for automobile insurance. Montana has the second-highest auto insurance premiums in the US, trailing only behind Michigan.
Cost of Registering A Car In Montana
All of the costs stated below are for a 12-month registration. Other periods should be multiplied or pro-rated based on the time duration for which the vehicle will be registered.
The following are the Montana car registration fees:
Vehicles under 4 years old: $217
Vehicles aged 5 to 10 years old: $87
Vehicles older than 11 years: $28 (if the car is not permanently registered)
Registering A Car Without Insurance In Montana
Driving without vehicle insurance is a crime in Montana. So you need to carry evidence of Montana auto insurance in your vehicle and show it to a law enforcement officer if asked. For a first violation, the penalty for lacking insurance is between $250 and $500, or up to 10 days in prison.
Moreover, confirmation of insurance is necessary at the time of registration. In Montana, you must carry $25,000 in bodily injury coverage, up to $50,000 per accident, and $20,000 in property damage coverage.
In short, Montana can be a perfect solution when you buy a luxury car. Even though the state sales tax on cars almost always tends to be zero, local taxes, insurance, and registration fees will stack up significantly.
So, it’s not that straightforward to register a car in Montana. We hope this article has helped you get a better idea of Montana’s sales tax on cars.