The North Dakota excise tax for motor vehicles is 5%. Excise tax is paid to the Motor Vehicles Division of the Department of Transportation when you register your vehicle.
There are a lot of expenses associated with car ownership. When you register your vehicle, you are usually charged some amount for fees and taxes, and it might not always be clear what they are for. Excise tax is one of those charges that you might not expect when you register a vehicle.
Here, we’ve gone through the regulations and legal jargon so you don’t have to. Here’s a guide to help you understand the North Dakota excise tax rates, penalties, and exemptions.
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What is an excise tax in North Dakota?
An excise tax is a tax levied against manufactured goods. They are not just for vehicles—often you’ll find excise taxes on things that pose a health or environmental threat. Things like alcohol, cigarettes, and gasoline all have excise taxes, but at the consumer level, you might not notice them since they just end up attached to the final cost of the good.
Motor vehicle excise taxes require some individual attention. Anyone registering a vehicle in North Dakota must pay an excise tax to the North Dakota Department of Transportation, Motor Vehicle Division.
The excise tax is different from the
North Dakota car sales tax, which only applies when you purchase the vehicle. Excise taxes are due every year upon registration of the vehicle.
The exact requirements for North Dakota’s excise tax are laid out in North Dakota Code
Chapter 57-40.3. To save you the headache of reading 12 sections of legal tax jargon, we’ll break down the main points here:
- North Dakota motor vehicle excise tax rates are 5%
- Tax is calculated using either the purchase price or the fair market value of the vehicle
- You still have to pay excise tax on leased vehicles calculated as 5% of the lease consideration
- If you paid an excise tax for your vehicle in another state, North Dakota offers credit for the amount paid if you can provide proof of payment
Excise taxes are due upon registration of your vehicle and are due in addition to any registration fees for license plates.
North Dakota gas tax
Calculating your excise tax payment
To get an idea of how much excise tax you will have to pay when you register your vehicle, the North Dakota DOT has created
a handy toolthat does the calculations for you. To use their calculator, you will need your North Dakota title number or all of the following:
- Year, make, and model
- The first year the vehicle was registered (this will be within one year of the model)
- Shipping or gross weight of the new vehicle (required, depending on the type of vehicle selected)
- Purchase price
- Date vehicle acquired
- Make, year model identification number, and allowance of a trade-in vehicle, if applicable
Penalties for nonpayment
If you fail or neglect to pay the excise tax, you will not be able to register your vehicle. Any amount owed will be considered a lien owed to the state upon all owned property and rights to property. The lien will have penalties added to it and accrue interest over time.
- A late filing penalty of 5% of the tax due or $5, whichever is more, every month after the documents were due, up to a 25% maximum
- A late payment penalty of 5% or $5, whichever is greater
- 12% interest for every year that the amount owed goes unpaid
Note that violations of the North Dakota code are considered a class B misdemeanor, punishable by up to 30 days in prison and a fine of up to $1,500.
In sum, unless you severely violate the code by committing some kind of tax fraud, the penalty for nonpayment is a maximum of 30% of the amount owed plus 12% interest per year.
How to avoid excise tax in North Dakota
In most cases, you can’t avoid paying the excise tax in North Dakota. Any amount owed will be added as a lien on your property and continue to be owed until it is paid (plus interest and penalties). Even if the lien is on the property of a deceased person, the lien is transferred to their beneficiary.
Still, there are some instances where you may be exempt from paying excise tax in North Dakota. There is a detailed list of exemptions outlined in section
§ 57-40.3-04of the North Dakota Code. Most of these exemptions involve vehicles registered with governments, charities, or special organizations. An outline of individual exemptions includes:
- Persons enrolled as a first nations tribal member if the vehicle was purchased on or delivered to the reservation where they are enrolled, or the sale of any vehicle to a first nations person who resides on a reservation. There is no exemption for tribal members leasing a vehicle.
- Resident disabled veterans and non-remarried spouses receiving department of veterans’ affairs dependency and indemnity compensation
- Persons currently serving in the armed forces
- Transfers of the vehicle by way of gift or inheritance if the vehicle has already been registered in the past year
- Vehicles acquired by a resident who was a prisoner of war
- Vehicles transferred to a former spouse as part of a divorce agreement
There may be some paperwork involved in order for you to receive the exemption. For example, those applying for a tribal claim exemption have to submit an
SFN 18085 Tribal Claim for Tax Exemption. As well, disabled veterans will need a signed letter from the department of veterans affairs office.
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