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.

Can you provide more examples of situations where there is no tax due on the transfer of title of a motor vehicle, all-purpose vehicle, off-highway motorcycle, titled watercraft, titled outboard motor, or titled personal watercraft?

(A) Sales to an organization that has been granted and maintains 501(c)(3) status by the Internal Revenue Service or is a not-for-profit organization operated exclusively for charitable purposes in this state. (NP)
Note: A motor vehicle sold to any organization for use in the operation or carrying on of a trade or business is taxable.

(B) Sales in interstate commerce with delivery being made by the seller to a point outside this state for use outside this state or delivered to an interstate carrier for delivery outside of Ohio. (IS)

(C) Sale to a purchaser for one of the following uses:

(a) As transportation equipment, except those licensed to operate on the public highways, to transport items in the process of production for sale by manufacturing, processing, assembling or refining within a plant. (PT) (See Rule 5703-9-21, Ohio Adm. Code)
(b) Directly in production of tangible personal property for sale by mining. Used prior to the tipple or crusher, or in the construction, operation and maintenance of private power lines to distribute electric energy for use in mining, whether licensed or not for highway use. (Rule 5703-9-22, Ohio Adm. Code) (DM)
(c) Directly in the exploration for or production of crude oil or natural gas. (DO)
(d) Sale to a nonresident of this state upon presentation of an affidavit executed in this state by the nonresident purchaser affirming that:

    (1) the purchaser is not a resident of this state, 
    (2) that possession of the vehicle is taken in this state for the sole purpose of immediately removing it from the state,
    (3) the resident state provides a nonresident motor vehicle exemption from their sales and use tax law under which Ohio residents can purchase a vehicle and not be required to pay sales or use tax, and 
    (4) that the vehicle will be permanently titled and registered in another state and that it will not be used in the State of Ohio. (NR)

Note: The sale of a motor vehicle consummated in Ohio to a nonresident member of the Armed Forces stationed in Ohio is subject to Ohio sales or use tax. This type of transaction does not qualify under the nonresident exemption because the vehicle will be used in Ohio. Please see the Information Release.

Another exception to the nonresident exemption is the sale of a motor vehicle consummated in Ohio to a nonresident student attending school in Ohio. In this case, the vehicle would not be immediately removed from the state as required by law and is used in Ohio.

(e) A motor vehicle that will be used as a “yard truck” to transport purchased inventory in a warehouse, distribution center or similar facility when the inventory is primarily distributed outside this state to retail stores of the person who owns or controls the warehouse, distribution center or similar facility. This exemption does not apply if the vehicle is licensed to operate on the public highways. (WH)

(D) Where the purchaser of the motor vehicle is:

(a) The State of Ohio or any political subdivision thereof. (SP)
(b) The federal government or any agency thereof. (FA)
(c) A motor vehicle dealer (new, used, leasing or salvage) obtaining title for “resale.” The clerk of courts will record on the title the valid dealer’s permit number and/or vendor’s license number. (RD, RL, RN, RO, or SR)
(d) A motor vehicle rental company having a valid vendor’s license (Resale – daily rental). (RR)
(e) A direct pay permit holder, in which case the direct pay number (98-XXXXXX) will be recorded on the title. (DP)
(f) A motor vehicle or watercraft dealer from another state or country and the vehicle, watercraft or outboard motor will be resold. (OD)

(E) Where evidence (court documents, Highway Patrol inspection report, etc.) obtained and retained by the clerk of courts is such that tax is not due as a result of:

(a) Transfer of title pursuant to a divorce decree. (DV)
(b) Transfer of title to a beneficiary through inheritance in the administration of an estate by Probate Court where there is no clear consideration. (IH)
(c) Where a finance company or lending institution takes constructive possession of a mortgagor’s car to protect its loan and thereafter the same mortgagor makes definite arrangements with the company to regain the car, it shall be titled back to the original mortgagor as “Redeemed.” (RP)
(d) The issuance of title to an unclaimed motor vehicle when the proper affidavit has been executed. (UC)
(e) The transfer of a pre-ATPS (gold) title to an ATPS title without a change of ownership. (HE)
(f) A resident of another state that  purchased (not including rentals or leases) in their home state a motor vehicle for use in that state, but then moves to Ohio. If the individual takes up residence in Ohio at least six months after purchase of the vehicle, they may obtain an Ohio title without paying use tax. Purchaser must prove to the satisfaction of the clerk of courts that the vehicle was purchased outside Ohio and used outside Ohio for at least six months. (CV)
(g) Insurance company taking title as result of a claim settlement may use the term “Resale – insurance claim.” (IC)
(h) All-purpose vehicle (APV) purchased prior to July 1, 1999; clerk of courts must have confirmation of the purchase date. (AP)
(i) Off-highway motorcycle (OHM) purchased prior to July 1, 1999; clerk of courts must have confirmation of the purchase date. (OH)
(j) New or used manufactured home or mobile home purchased on or after Jan. 1, 2000. (MH)
(k) Personal watercraft sold before Jan. 1, 2000. (WP)
(l) Transfer of a motor vehicle into the name of a franchised motor vehicle dealer for purposes of demonstration to prospective purchasers. When issuing title, the word “Demonstrator” must be on the title. (RD)
(m) Sales of emergency and fire-protection vehicles to volunteer fire departments that are under contract with a political subdivision of this state (county, township or municipality) to provide fire protection and emergency services. (VF)
(n) Effective January 2013, the United States Department of State, Office of Foreign Missions, has informed the Department of Taxation that foreign diplomats and their members and dependents must have a Motor Vehicle Tax-Exemption Letter issued by the Office of Foreign Missions in order to purchase or lease a motor vehicle without paying use tax.  The Diplomatic Tax Exemption Cards previously used by such persons to make tax-exempt purchases cannot be used to purchase motor vehicles exempt from use tax. (FD)
(o) The transfer of title to a motor vehicle that was purchased outside of Ohio for use outside of Ohio by a member of the Armed Services. The titleholder must be able to establish the fact that the vehicle has been or will be used outside of Ohio for at least six months after it is acquired. (CM)
(p) The purchaser of a motor vehicle is using the vehicle (through a power take-off unit) in the production of a product for sale by manufacturing, processing or refining (i.e., cement mixer where the mixing unit is operated through a power take-off unit instead of a separate power source). (MO)
(q) The purchaser of a motor vehicle is purchasing a specially designed and equipped motor vehicle for use in rendering a public utility service. (PU)

Note: The PU exemption will cover ambulance services if the following conditions exist:

(1) the purchaser has a certificate of public convenience and necessity; , and 2) the vehicle is directly and primarily used in providing the ambulance service. The purchaser must provide a motor vehicle exemption certificate indicating that the vehicle is “used directly in the rendition of a public utility service.”  Note—Private ambulance companies do not qualify for the public utility exemption unless they hold a certificate of public convenience and necessity. 

(r) The transfer of title to the beneficiary or beneficiaries stated on a title that is in the name of a sole owner with transfer-on-death designation. (TD)

(F) Where there is no “good and valuable consideration” given in exchange for the transfer of title to the motor vehicle, watercraft or outboard motor:

(a) The transfer of a corporate  asset to the surviving corporation as a result of a merger or to a new corporation as a result of a consolidation. (MR or CS)
(b) The transfer of title from a corporation to one of its stockholders upon dissolution of the corporation. (DS)
(c) The transfer of title due to a corporate name change only. (NC)
(d) Transfer of title from an individual to a partnership of which the individual is a member if no clear consideration is given by the partnership for the transfer. (IP)
(e) Transfer of title from a partnership to a partner (individual) upon dissolution of the partnership. (PD)
(f) Transfer of title from an employee to an employer for the sole purpose of insuring the vehicle as a part of the employer’s insurance. (PRICE OF $0.00)
(g) Transfer of title from an employer to an employee for the sole purpose of insurance. (PRICE OF $0.00)
(h) Where a trade-in is titled by a dealer for resale pursuant to the sale of another vehicle and that sale is not consummated, the trade-in title may be transferred back to the original titleholder as “Redeemed.” (RS)
(i) The transfer of title where an undisturbed mortgage is involved and the transferor is not relieved of his original principal liability and there have been no changes in the original mortgage paper filed or any other consideration given. Also, title transfers from two names to only one of the original names and the mortgage remains in both names or the title transfers from two names to only one of the original names and the mortgage also changes from two names to only one of the original names. (UM)
(j) The transfer of title between parents and their children, husband and wife, or between two unrelated parties in the absence of any clear consideration. (PRICE OF $0.00)
(k) The transfer of an unencumbered title from a sole owner, partnership or corporation to a limited liability partnership (LLP) or limited liability company (LLC), and there is no clear consideration. Or, the transfer of title and there is an outstanding loan or lien on the title, and there is no change to the loan agreement as a result of the transfer (undisturbed mortgage). (PRICE OF $0.00)

(G) Where title to a vehicle is  transferred to an individual who is not a motor vehicle dealer but the vehicle is to be resold.

(a) A finance company or bank repossessing a vehicle to protect the loan may use the term  “Resale – financial institution.” (RF) effective June 9, 2000.
(b) Pawnbroker taking title to a vehicle pursuant to Section 4505.102 of the Ohio Revised Code to protect a loan may use the term “Resale – financial institution.” (RF) effective June 9, 2000.
(c) Insurance company taking title as result of a claim settlement may use the term “Resale – insurance claim.” (IC)
(d) Any licensed dealer taking a salvage title to a vehicle that is to be dismantled and sold as parts, or to sell the salvage vehicle on a salvage title to a new or used dealer or an individual may use the term “Salvage – resale.” (SR)
(e) Manufacturer taking title to a chassis which will become part of a manufactured item that will be titled as a motor vehicle when sold to the ultimate consumer must accompany the application for title with an exemption certificate setting forth the statutory reason for exemption of “use or consumption as a material or part for incorporation into personal property to be produced for sale by manufacturing, assembling or processing.” (RM)
(f) Financial institution taking title to a motor vehicle for the sole purpose of selling the motor vehicle to a licensed motor vehicle dealer may use the term “Resale – wholesale.” (RW)
(g) Farm implement or construction equipment dealers sometimes purchase and resale a horse, utility or equipment “trailer” with a gross weight in excess of 4,000 pounds that requires a title.  If the implement or construction equipment dealer is in the business of regularly selling such trailers, they must be licensed as a motor vehicle dealer by the Bureau of Motor Vehicles.  However, if they only occasionally sell trailers that must be titled, the BMV does not require them to obtain a license. Nevertheless, the implement or equipment dealer must have a vendor’s license as they are making retail sales. The implement or equipment dealers can claim the resale exemption on these trailers, if they are acquired for the purposes of resale. Such dealers MUST submit an exemption certificate with the application for certificate of title using the term “Resale – implement/equipment dealer.” (RI)

Special Note: A farm implement or construction equipment dealer cannot use this exemption to purchase trailers that are used by the dealers to transport other tangible personal property that it sells (tractors, plows, disc harrows, fertilizer spreaders, combines, bulldozers, backhoes, motor vehicles, etc.).

Can you provide more examples of situations where there is no tax due on the transfer of title of a motor vehicle, all-purpose vehicle, off-highway motorcycle, titled watercraft, titled outboard motor, or titled personal watercraft?

(A) Sales to an organization that has been granted and maintains 501(c)(3) status by the Internal Revenue Service or is a not-for-profit organization operated exclusively for charitable purposes in this state. (NP)
Note: A motor vehicle sold to any organization for use in the operation or carrying on of a trade or business is taxable.

(B) Sales in interstate commerce with delivery being made by the seller to a point outside this state for use outside this state or delivered to an interstate carrier for delivery outside of Ohio. (IS)

(C) Sale to a purchaser for one of the following uses:

(a) As transportation equipment, except those licensed to operate on the public highways, to transport items in the process of production for sale by manufacturing, processing, assembling or refining within a plant. (PT) (See Rule 5703-9-21, Ohio Adm. Code)
(b) Directly in production of tangible personal property for sale by mining. Used prior to the tipple or crusher, or in the construction, operation and maintenance of private power lines to distribute electric energy for use in mining, whether licensed or not for highway use. (Rule 5703-9-22, Ohio Adm. Code) (DM)
(c) Directly in the exploration for or production of crude oil or natural gas. (DO)
(d) Sale to a nonresident of this state upon presentation of an affidavit executed in this state by the nonresident purchaser affirming that:

    (1) the purchaser is not a resident of this state, 
    (2) that possession of the vehicle is taken in this state for the sole purpose of immediately removing it from the state,
    (3) the resident state provides a nonresident motor vehicle exemption from their sales and use tax law under which Ohio residents can purchase a vehicle and not be required to pay sales or use tax, and 
    (4) that the vehicle will be permanently titled and registered in another state and that it will not be used in the State of Ohio. (NR)

Note: The sale of a motor vehicle consummated in Ohio to a nonresident member of the Armed Forces stationed in Ohio is subject to Ohio sales or use tax. This type of transaction does not qualify under the nonresident exemption because the vehicle will be used in Ohio. Please see the Information Release.

Another exception to the nonresident exemption is the sale of a motor vehicle consummated in Ohio to a nonresident student attending school in Ohio. In this case, the vehicle would not be immediately removed from the state as required by law and is used in Ohio.

(e) A motor vehicle that will be used as a “yard truck” to transport purchased inventory in a warehouse, distribution center or similar facility when the inventory is primarily distributed outside this state to retail stores of the person who owns or controls the warehouse, distribution center or similar facility. This exemption does not apply if the vehicle is licensed to operate on the public highways. (WH)

(D) Where the purchaser of the motor vehicle is:

(a) The State of Ohio or any political subdivision thereof. (SP)
(b) The federal government or any agency thereof. (FA)
(c) A motor vehicle dealer (new, used, leasing or salvage) obtaining title for “resale.” The clerk of courts will record on the title the valid dealer’s permit number and/or vendor’s license number. (RD, RL, RN, RO, or SR)
(d) A motor vehicle rental company having a valid vendor’s license (Resale – daily rental). (RR)
(e) A direct pay permit holder, in which case the direct pay number (98-XXXXXX) will be recorded on the title. (DP)
(f) A motor vehicle or watercraft dealer from another state or country and the vehicle, watercraft or outboard motor will be resold. (OD)

(E) Where evidence (court documents, Highway Patrol inspection report, etc.) obtained and retained by the clerk of courts is such that tax is not due as a result of:

(a) Transfer of title pursuant to a divorce decree. (DV)
(b) Transfer of title to a beneficiary through inheritance in the administration of an estate by Probate Court where there is no clear consideration. (IH)
(c) Where a finance company or lending institution takes constructive possession of a mortgagor’s car to protect its loan and thereafter the same mortgagor makes definite arrangements with the company to regain the car, it shall be titled back to the original mortgagor as “Redeemed.” (RP)
(d) The issuance of title to an unclaimed motor vehicle when the proper affidavit has been executed. (UC)
(e) The transfer of a pre-ATPS (gold) title to an ATPS title without a change of ownership. (HE)
(f) A resident of another state that  purchased (not including rentals or leases) in their home state a motor vehicle for use in that state, but then moves to Ohio. If the individual takes up residence in Ohio at least six months after purchase of the vehicle, they may obtain an Ohio title without paying use tax. Purchaser must prove to the satisfaction of the clerk of courts that the vehicle was purchased outside Ohio and used outside Ohio for at least six months. (CV)
(g) Insurance company taking title as result of a claim settlement may use the term “Resale – insurance claim.” (IC)
(h) All-purpose vehicle (APV) purchased prior to July 1, 1999; clerk of courts must have confirmation of the purchase date. (AP)
(i) Off-highway motorcycle (OHM) purchased prior to July 1, 1999; clerk of courts must have confirmation of the purchase date. (OH)
(j) New or used manufactured home or mobile home purchased on or after Jan. 1, 2000. (MH)
(k) Personal watercraft sold before Jan. 1, 2000. (WP)
(l) Transfer of a motor vehicle into the name of a franchised motor vehicle dealer for purposes of demonstration to prospective purchasers. When issuing title, the word “Demonstrator” must be on the title. (RD)
(m) Sales of emergency and fire-protection vehicles to volunteer fire departments that are under contract with a political subdivision of this state (county, township or municipality) to provide fire protection and emergency services. (VF)
(n) Effective January 2013, the United States Department of State, Office of Foreign Missions, has informed the Department of Taxation that foreign diplomats and their members and dependents must have a Motor Vehicle Tax-Exemption Letter issued by the Office of Foreign Missions in order to purchase or lease a motor vehicle without paying use tax.  The Diplomatic Tax Exemption Cards previously used by such persons to make tax-exempt purchases cannot be used to purchase motor vehicles exempt from use tax. (FD)
(o) The transfer of title to a motor vehicle that was purchased outside of Ohio for use outside of Ohio by a member of the Armed Services. The titleholder must be able to establish the fact that the vehicle has been or will be used outside of Ohio for at least six months after it is acquired. (CM)
(p) The purchaser of a motor vehicle is using the vehicle (through a power take-off unit) in the production of a product for sale by manufacturing, processing or refining (i.e., cement mixer where the mixing unit is operated through a power take-off unit instead of a separate power source). (MO)
(q) The purchaser of a motor vehicle is purchasing a specially designed and equipped motor vehicle for use in rendering a public utility service. (PU)

Note: The PU exemption will cover ambulance services if the following conditions exist:

(1) the purchaser has a certificate of public convenience and necessity; , and 2) the vehicle is directly and primarily used in providing the ambulance service. The purchaser must provide a motor vehicle exemption certificate indicating that the vehicle is “used directly in the rendition of a public utility service.”  Note—Private ambulance companies do not qualify for the public utility exemption unless they hold a certificate of public convenience and necessity. 

(r) The transfer of title to the beneficiary or beneficiaries stated on a title that is in the name of a sole owner with transfer-on-death designation. (TD)

(F) Where there is no “good and valuable consideration” given in exchange for the transfer of title to the motor vehicle, watercraft or outboard motor:

(a) The transfer of a corporate  asset to the surviving corporation as a result of a merger or to a new corporation as a result of a consolidation. (MR or CS)
(b) The transfer of title from a corporation to one of its stockholders upon dissolution of the corporation. (DS)
(c) The transfer of title due to a corporate name change only. (NC)
(d) Transfer of title from an individual to a partnership of which the individual is a member if no clear consideration is given by the partnership for the transfer. (IP)
(e) Transfer of title from a partnership to a partner (individual) upon dissolution of the partnership. (PD)
(f) Transfer of title from an employee to an employer for the sole purpose of insuring the vehicle as a part of the employer’s insurance. (PRICE OF $0.00)
(g) Transfer of title from an employer to an employee for the sole purpose of insurance. (PRICE OF $0.00)
(h) Where a trade-in is titled by a dealer for resale pursuant to the sale of another vehicle and that sale is not consummated, the trade-in title may be transferred back to the original titleholder as “Redeemed.” (RS)
(i) The transfer of title where an undisturbed mortgage is involved and the transferor is not relieved of his original principal liability and there have been no changes in the original mortgage paper filed or any other consideration given. Also, title transfers from two names to only one of the original names and the mortgage remains in both names or the title transfers from two names to only one of the original names and the mortgage also changes from two names to only one of the original names. (UM)
(j) The transfer of title between parents and their children, husband and wife, or between two unrelated parties in the absence of any clear consideration. (PRICE OF $0.00)
(k) The transfer of an unencumbered title from a sole owner, partnership or corporation to a limited liability partnership (LLP) or limited liability company (LLC), and there is no clear consideration. Or, the transfer of title and there is an outstanding loan or lien on the title, and there is no change to the loan agreement as a result of the transfer (undisturbed mortgage). (PRICE OF $0.00)

(G) Where title to a vehicle is  transferred to an individual who is not a motor vehicle dealer but the vehicle is to be resold.

(a) A finance company or bank repossessing a vehicle to protect the loan may use the term  “Resale – financial institution.” (RF) effective June 9, 2000.
(b) Pawnbroker taking title to a vehicle pursuant to Section 4505.102 of the Ohio Revised Code to protect a loan may use the term “Resale – financial institution.” (RF) effective June 9, 2000.
(c) Insurance company taking title as result of a claim settlement may use the term “Resale – insurance claim.” (IC)
(d) Any licensed dealer taking a salvage title to a vehicle that is to be dismantled and sold as parts, or to sell the salvage vehicle on a salvage title to a new or used dealer or an individual may use the term “Salvage – resale.” (SR)
(e) Manufacturer taking title to a chassis which will become part of a manufactured item that will be titled as a motor vehicle when sold to the ultimate consumer must accompany the application for title with an exemption certificate setting forth the statutory reason for exemption of “use or consumption as a material or part for incorporation into personal property to be produced for sale by manufacturing, assembling or processing.” (RM)
(f) Financial institution taking title to a motor vehicle for the sole purpose of selling the motor vehicle to a licensed motor vehicle dealer may use the term “Resale – wholesale.” (RW)
(g) Farm implement or construction equipment dealers sometimes purchase and resale a horse, utility or equipment “trailer” with a gross weight in excess of 4,000 pounds that requires a title.  If the implement or construction equipment dealer is in the business of regularly selling such trailers, they must be licensed as a motor vehicle dealer by the Bureau of Motor Vehicles.  However, if they only occasionally sell trailers that must be titled, the BMV does not require them to obtain a license. Nevertheless, the implement or equipment dealer must have a vendor’s license as they are making retail sales. The implement or equipment dealers can claim the resale exemption on these trailers, if they are acquired for the purposes of resale. Such dealers MUST submit an exemption certificate with the application for certificate of title using the term “Resale – implement/equipment dealer.” (RI)

Special Note: A farm implement or construction equipment dealer cannot use this exemption to purchase trailers that are used by the dealers to transport other tangible personal property that it sells (tractors, plows, disc harrows, fertilizer spreaders, combines, bulldozers, backhoes, motor vehicles, etc.).