Car Sales Tax Exemption in Texas
Which vehicle transfers are exempt from Texas sales tax — family gifts, inheritance, trade-ins, nonprofit use, and military status.
Current Texas Vehicle Sales Tax Rate
6.25% Motor Vehicle Sales and Use Tax
Exemption Summary
| Exemption Type | Texas |
|---|---|
| Family Gift Transfer | ✓ Exempt |
| Inherited Vehicle | ✓ Exempt |
| Trade-In Credit | ✓ Credit Available |
| Nonprofit / Charity | ✓ Exempt (501(c)(3)) |
| Military Exemption | ✓ Partial Exemption |
Exemption Details
Family Gift Transfer
Texas exempts vehicle transfers between spouses and lineal relatives (parent/child/grandparent/grandchild). A gift affidavit (Form 14-317) must be filed with TxDMV.
Inherited Vehicle
Texas exempts vehicles transferred through inheritance or bequest from motor vehicle sales tax. Form 130-U must document "inheritance" as the transfer reason.
Trade-In Credit
Texas offers a trade-in credit reducing the taxable base by the trade-in value. Only trade-ins at licensed dealers qualify — not private party exchanges.
Military Exemption
Texas active-duty military members stationed in Texas but domiciled in another state are exempt from Texas motor vehicle sales tax on one qualifying vehicle.
How to Document an Exempt Transfer
- ✓Sign the title with the relationship or reason clearly noted (e.g., "GIFT — Mother to Son")
- ✓Include a bill of sale showing $0 consideration for gifts, or inheritance documentation
- ✓Complete any state-required exemption forms (e.g., Texas Form 14-317 Gift Affidavit)
- ✓Bring estate documents (will, letters testamentary) for inherited vehicle transfers
- ✓Keep copies of all documents — the exemption can be audited years later
Texas Note
Texas requires a Gift Affidavit (Form 14-317) for all tax-exempt family transfers. Without this form, the transfer will be taxed at 6.25% or SPV — whichever is higher.
Frequently Asked Questions
- Can I give my car to a family member without paying sales tax in Texas?
- Yes. Texas exempts vehicle transfers between spouses and lineal relatives (parent/child/grandparent/grandchild). A gift affidavit (Form 14-317) must be filed with TxDMV.
- Is an inherited car taxable in Texas?
- No. Texas exempts vehicles transferred through inheritance or bequest from motor vehicle sales tax. Form 130-U must document "inheritance" as the transfer reason.
- Does Texas offer a trade-in credit for car purchases?
- Yes. Texas offers a trade-in credit reducing the taxable base by the trade-in value. Only trade-ins at licensed dealers qualify — not private party exchanges.
- Is there a military car sales tax exemption in Texas?
- Yes. Texas active-duty military members stationed in Texas but domiciled in another state are exempt from Texas motor vehicle sales tax on one qualifying vehicle.
- How do I document a tax-exempt vehicle transfer?
- You need: (1) the signed title clearly indicating the relationship or reason for exemption, (2) a bill of sale noting "$0 consideration" or "GIFT" for gift transfers, (3) any state-specific exemption form required by the revenue department or DMV, and (4) estate documentation for inherited vehicles.
- What is the sales tax rate on car purchases in Texas?
- Texas sales/use tax on vehicle purchases is 6.25% Motor Vehicle Sales and Use Tax. This rate applies to the taxable purchase price after any applicable exemptions or trade-in credits.
Document the Transfer Properly
A properly completed bill of sale — including $0 consideration or exemption reason — is essential documentation for any tax-exempt vehicle transfer.
Generate Texas Bill of Sale