Vehicle Taxability & Exemptions

Taxability & Exemptions of Motor Vehicles

All sales of motor vehicle are subject to sales or use tax unless an exemption applies.  The tax rate charged is based on the county of the purchaser’s residence.  While  other items may be exempted as a casual sale, the resale of a used motor vehicle is not eligible for this exemption.  

Did you receive a notice from us? 

The definition of a Casual Sale is found in R.C. 5739.01(L).

The application of Sales and Use tax to a casual sale can be referenced in R.C. 5739.02(B)(8)

What is an exemption?

An exemption is a statutory reason that a retail sale is not subject to  sales or use tax. This page discusses exemptions that may apply to motor vehicle transfers.

 

A few examples of exemptions for motor vehicles:

Direct FarmingFarming –Motor vehicles  used primarily in the production of agricultural products for sale may be exempt under R.C. 5739.02(B)(17)

Transportation for Hire – Motor vehicles used primarily in transporting tangible personal property for others may be exempt under R.C. 5739.02(B)(32)

Nonprofit Organizations & Churches – Purchases of motor vehicles by nonprofit charitable organizations and churches may be exempt if the vehicle is purchased by and titled in the name of the organization.  R.C. 5739.02(B)(12)

Transportation Services and Public Utilities  – Vehicles   primarily used to provide taxable transportation services,  such as taxicabs or charter services.  Note—the purchaser  is required to have a vendor’s license and remit sales tax on its taxable transportation services.  R.C. 5739.02(B)(41)

What other vehicle purchases are exempt from the sales and use tax?

Find the answer on our Exemptions Definitions page.

 

Frequently Asked Questions Tool

The Ohio Department of Taxation has compiled a list of frequently asked questions covering many different categories.

To view the questions, click on the "Select Category" bar and then click on  the category you are interested in.  A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

  

How are lease assumptions of motor vehicles and other tangible personal property taxed?

A lease assumption is when a lessee has another person assume the lease payments and lease responsibilities.  This should not be done without the lessors’ knowledge or approval.

If the lease was consummated in Ohio after Feb. 1, 2002, and there are no changes to the original lease agreement, there is no sales tax due to the State of Ohio.

If an Ohio resident assumes an out of state lease, Ohio use tax may be due and payable up front on the remainder of the lease payments. If the other state required the tax to be paid on each monthly installment, Ohio tax is calculated on the remaining payments and paid up front to the leasing company. If the other state collected tax up front, Ohio tax is calculated on the payments remaining upon entry into Ohio. Credit is given for taxes legally paid to the other state and the leasing company must collect any additional tax due.

How are lease assumptions of motor vehicles and other tangible personal property taxed?

A lease assumption is when a lessee has another person assume the lease payments and lease responsibilities.  This should not be done without the lessors’ knowledge or approval.

If the lease was consummated in Ohio after Feb. 1, 2002, and there are no changes to the original lease agreement, there is no sales tax due to the State of Ohio.

If an Ohio resident assumes an out of state lease, Ohio use tax may be due and payable up front on the remainder of the lease payments. If the other state required the tax to be paid on each monthly installment, Ohio tax is calculated on the remaining payments and paid up front to the leasing company. If the other state collected tax up front, Ohio tax is calculated on the payments remaining upon entry into Ohio. Credit is given for taxes legally paid to the other state and the leasing company must collect any additional tax due.

How are lease assumptions of motor vehicles and other tangible personal property taxed?

A lease assumption is when a lessee has another person assume the lease payments and lease responsibilities.  This should not be done without the lessors’ knowledge or approval.

If the lease was consummated in Ohio after Feb. 1, 2002, and there are no changes to the original lease agreement, there is no sales tax due to the State of Ohio.

If an Ohio resident assumes an out of state lease, Ohio use tax may be due and payable up front on the remainder of the lease payments. If the other state required the tax to be paid on each monthly installment, Ohio tax is calculated on the remaining payments and paid up front to the leasing company. If the other state collected tax up front, Ohio tax is calculated on the payments remaining upon entry into Ohio. Credit is given for taxes legally paid to the other state and the leasing company must collect any additional tax due.