How to Pay Your Vermont Excise Tax

There’s no vehicle excise tax in Vermont—but the state does collect a one-time purchase and use tax with every first-time registration of a new or used car.
Written by Amber Reed
Reviewed by Hillary Kobayashi
In lieu of a motor vehicle excise tax, the state of Vermont collects a one-time purchase and use tax with every first-time registration of a new or used vehicle. 
If you just moved to Vermont from a state where you had to pay an excise tax with your yearly car registration renewal, then you might be wondering how that process works in your new state. 
But when it comes to registering a car in Vermont, residents do not pay an annual excise tax on car ownership. Instead, you’ll simply pay the Department of Motor Vehicles registration fee and a one-time purchase and use tax.
In this short guide from
, the
car insurance
super app, we’ll explain what the vehicle excise tax is and how it applies (or doesn’t apply) if you live in Vermont. Then, we’ll show you how to lower your
Vermont car insurance costs
in under a minute.

What is an excise tax in Vermont?

An excise tax is a special type of tax imposed on manufactured goods that could have detrimental effects on public health or the environment—that’s why the state of Vermont levies excise taxes against cigarettes, cannabis, alcohol, cellphones, and gasoline.
Instead of a true motor vehicle excise tax, Vermont drivers pay a purchase and use tax when they register a new or used car in the state. The details of this tax are laid out in Title 32 of the Vermont Statutes and can be found on the
Vermont Department of Motor Vehicles’ website
Unlike a motor vehicle excise tax which is charged yearly, you only have to pay Vermont’s purchase and use tax when you register a new or used car for the first time. This means that your initial car registration in Vermont will be more expensive than your renewals  since you’ll pay additional fees based on either your car’s purchase price or its
National Automobile Dealers Association (NADA) value
—whichever is greater.
All cars, SUVs, trucks, and motorcycles are charged a tax rate of 6% for the state’s purchase and use tax. This fee is paid directly to the Department of Motor Vehicles, along with your first-time
registration costs
. You can not register a vehicle in Vermont without paying the purchase and use tax. 
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Calculating your excise tax payment

If you’re about to register a vehicle in Vermont and want to know how much you’ll pay for the state’s purchase and use tax, you can calculate your total costs ahead of time. 
In most cases, drivers who bought a new car can determine their purchase and use tax fee simply by calculating 6% of the total amount they paid for the car. But if you bought a used car, then you’ll also need to check its value with
. If your vehicle’s NADA value is more than what you paid for the car, then you’ll have to calculate 6% of that value—not its purchase price.
The total amount you can be charged for Vermont’s purchase and use tax is capped at $2,075. This means that if you bought a new 2022
Audi RS5
for $76,995 and determined that 6% of its purchase price comes out to $4,619—you’d only have to pay $2,075 of that cost. 
On the other hand, if you bought a new 2022
Nissan Sentra
for $23,795 and determined that 6% of its price is $1,427—you’d pay that amount in full.

Penalties for nonpayment

In order to register any new or used car in the state of Vermont, you must pay the purchase and use tax at the same time you pay your registration fee. If you can’t pay the purchase and use tax, you will not be permitted to register your car.
Keep in mind that driving an unregistered vehicle in Vermont is illegal, and doing so puts you at risk of getting pulled over by law enforcement and being issued a fine

How to avoid excise tax in Vermont

For most drivers, paying Vermont’s purchase and use tax is unavoidable—but if your vehicle meets one of the following criteria, then it might be exempt
  • It belongs to the government or military.
  • It belongs to a religious institution or charity.
  • It was transferred to a new owner as a gift and was originally registered in the name of the previous owner.
  • It’s equipped with special controls for operation by a disabled person.
  • It was previously registered in another state.
  • It’s being transferred to another individual in a divorce settlement or after a death.
Fill out the Vermont DMV’s
certificate of tax exemption
if you think you should be exempt from the state’s purchase and use tax.

How to save on car insurance in Vermont

If you think you’re paying too much for your Vermont car insurance, the
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