How to Pay Your Oregon Excise Tax

As of 2018, Oregon has vehicle use and privilege taxes of one-half of one percent of the retail price of qualifying vehicles.
Written by Amber Reed
Reviewed by Hillary Kobayashi
Effective January 1, 2018,
has a vehicle privilege tax or vehicle use tax of one-half of one percent of the retail price on qualifying vehicles. Which one you pay depends on whether the vehicle was purchased in or out of state. 
Let’s be honest: taxes are taxing in more than one way. Not only do they straight up cost you money, but trying to figure out how much you owe and to whom can make you feel like you just want to bang your head against a wall. 
But here to save you from all that annoyance (and a possible concussion) is
! In this article, we’ll go over what you need to know about Oregon’s vehicle excise tax: what they are, when you owe them, and how to pay them.

What is an excise tax in Oregon?

Generically, an excise tax is a tax that’s levied against a particular good, service, or activity. In the US, they’re often applied to items that present some health or environmental threat, like cigarettes, alcohol, or polluting vehicles. Several new taxes took effect in Oregon as of January 1, 2018, and one of them was a vehicle excise tax.
Oregon calls its vehicle excise taxes either a vehicle privilege tax or a vehicle use tax, but don’t let the lingo confuse you—they’re both just excise taxes on vehicles. If you buy a car from a dealership in Oregon or live in Oregon and buy a car from a dealership out of state, you’ll have to pay an excise tax within 30 days of your purchase. 
Fortunately, the process is pretty cut and dry, and more often than not, the dealership takes care of handling the payment for you at the point of purchase. The Oregon Department of Revenue made a helpful
information sheet and flow chart
about this tax, but here are the nuts and bolts of it.
The amount of the tax is one-half of one percent (0.5%) on the retail price of a taxable motor vehicle. The taxable amount is not affected by your trade-in, down payment, or add-ons (like warranties or service agreements). However, any specific rebates or discounts that reduce the sales price will affect the taxable amount. 
What determines what vehicles are taxed? Glad you asked! The Oregon Department of Revenue (DOR) states that a taxable vehicle must meet all of these points
  • Purchased from an Oregon dealer or someone who would need to be registered as an Oregon dealer
  • Have a purchase date of January 1, 2018, or later
  • Have less than 7,500 miles if it has an odometer or sold with a manufacturer's certificate of origin (MCO/MSO) if it does not have an odometer
  • Have a gross vehicle weight of 26,000 pounds or less
  • Have not been previously registered or titled in Oregon for anything other than a dealer demonstrator
The precise name of the tax depends on whether you buy the car from a dealership that’s in or out of Oregon. If it’s in Oregon, it’s called a vehicle privilege tax. If you’re an Oregonian purchasing a car out of state, it’s called a vehicle use tax. Why? Who knows. 
If you’re buying a car from a private party and not a dealership or car lot, you don’t need to worry about either of these taxes. 
If you want to dig into the details further on your own, check out the Oregon Department of Revenue’s
guide to vehicle privilege and use taxes
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Paying your excise tax 

The amount of the tax is always 0.5% of the retail price, but the procedure for how it gets paid varies a little bit. 
If you’re buying a car from a dealership or car lot in Oregon, the dealership is responsible for collecting the vehicle privilege tax from you and submitting it to the Oregon Department of Revenue. This will likely appear as one of the endless amounts of additional lines in your purchase contract, along with document processing fees, registration fees, and so on. Make sure you check their math, as some dealerships are less reputable than others. 
If you’re an Oregon resident and are buying a car for a dealership out of state, then it might be a little more complicated than that. The Oregon DOR states that if it’s a dealership that’s located out of state but still has a “physical presence in Oregon sufficient to create a substantial nexus for tax purposes,” then they are responsible for collecting and submitting the vehicle use tax
Alternatively, an out-of-state dealer who isn’t required to collect and submit the tax may still choose to do so, which is convenient for the buyer but involves some paperwork on the seller’s end. 
If a dealership doesn’t collect and submit the vehicle use tax for you, then it’s your responsibility to do it. Fortunately, the process is pretty easy and can be
done online
. Once the payment has been processed, you’ll be emailed a certificate that you need to bring to the DMV to get your vehicle registered in Oregon. 

Penalties for nonpayment

If you’re the one responsible for paying your vehicle use tax, it’s due within 30 days of the date of purchase. There’s a 20 percent penalty for not filing within 30 days of your date of purchase—plus interest calculated from the due date. Dealerships are required to pay taxes quarterly, but the amount of the penalty remains the same. 
MORE: Title transfer in Oregon

How to avoid excise tax in Oregon

There aren’t a lot of exemptions to the vehicle excise tax in Oregon, but there are a few. Here are the scenarios where the vehicle privilege tax (purchased in Oregon) won’t apply:
  • Vehicles purchased by non-Oregonians
  • Vehicles purchased by a business that will be used in another state
  • Vehicles purchased at a public paid admission auction event that lasts less than seven days in a row
  • Vehicles sold where the seller gets a resale certificate from a buyer who is in the vehicle-selling business
The only exception that applies to the vehicle use tax is the last bullet point on this list. In most cases, you can expect to pay one of the two vehicle taxes if you’re an Oregonian. 
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