How Much is Tax, Title, and License in Arizona? (2024)
Last Updated: December 10, 2022 • 8 min read
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You will often spend more than the list price when purchasing a car. It doesn't matter if it is a new vehicle or a used car. This happens because most transactions in the United States have taxes attached to them.
The initial Arizona Motor Vehicle Division (MVD) costs, such as the registration, license plate, and title fees, are of no crucial concern. However, the car dealership may have additional fees.
Also, there is car sales taxation, which does not include private party transactions in Arizona. Additionally, some states impose additional fees such as personal property taxes, usage fees, excise duties, license plate fees, or luxury taxes.
Title Transfer
Title transferring means legally owning the car. The document will have your name, claiming that you are the owner. So, you’ll have to change the title from the dealer or previous owner to your name after a vehicle purchase in the state of Arizona. This state title will be good to go and doesn't need to be renewed every year so you only have to pay the initial fee.
Title transfer costs only $4.
Vehicle License Tax (VLT)
Arizona has a Vehicle License Tax (VLT) system that allows tax collection on the vehicle and its value. The VLT is a tax levied on every car registered in Arizona. The vehicle registration tax is variable and is assessed on the vehicle’s value.
The Arizona Department of Revenue administers the program, which requires all vehicles to be registered annually. Vehicles must be registered before being sold or transferred to another owner. This can be done at the MVD office, or online on the Arizona Department of Transportation (ADOT) website.
If you live in Arizona and own a car, you need to pay Vehicle License Tax (VLT) every year. You could face fines and fees if you don’t pay the VLT.
You’ll pay a different amount of VLT depending on the type of vehicle you have:
- a passenger vehicle (e.g., car) with four wheels or more
- a commercial vehicle (e.g., truck) with two or more axles
The fees that you pay as VLT are used to pay for many things across Arizona. The breakdown is as follows:
- 24.59% Your City/Town General Fund. This is a general overall fund for your city or town. This is different than enterprise funds, streets, internal services, replacement funds, etc.
- 24.59% Your County General Fund. Same as above but for your county instead. This could be Maricopa county if you live in Phoenix, etc.
- 22.72% State Highways Fund. These are the large highways that the state actively manages
- 14.38% Your County Roads. These are the roads that are managed by your county, and not your city or town
- 13.72% Your City/Town Roads. These are the roads that are exclusively managed by your town or city
How To Calculate VLT For Your Vehicle
It might seem that calculating VLT for your vehicle will be difficult. However, that’s not the case. Let’s figure out your Vehicle’s VLT.
As stated earlier, VLT cost changes yearly with your vehicle’s value. If your car is new and expensive, the VLT is more. If your car is used or old and cheaper, the VLT will be less.
60% of the assessed value of your vehicle determines how much VLT you have to pay. Moreover, you deduct 16.25% from this cost annually you register to account for depreciation before performing a few other estimates.
VLT calculation for new cars
Suppose you buy a new car for $100,000. So, 60% of this base price is $60,000. Now multiply $2.80 for every $100 of your car’s value. It gives us 600 x 2.80 = $1680.
So, Vehicle License Tax for a new car worth $100,000 will be $1,680.
VLT calculation for used cars
Calculating VLT for used cars is the same as a brand new car, with a few changes.
First, you have to deduct 16.5% from the base price. Secondly, you must multiply 2.89 instead of 2.80 for every $100 of your car’s value.
So, $100,000 - 16.5% = $84,500. Now, 60% of $84,500 is $50,700.
Now, multiply $2.89 x 507 = $1,465.
So, the VLT for a year-old car worth $100,000 will be $1,465.
Do You Need To Register Your Car in Arizona?
It depends on your stay. You might need registration if you intend to stay up to seven months in a single year. If you don’t want to stay longer and spend a season, you may not need to get Arizona license plates. That’s why it’s essential to know your stay duration and if you need to register your vehicle or not.
Are There Any Exemptions To Vehicle License Tax?
Since all Arizona residents aren’t all in the same position, there are many exemptions to VLT. Some are listed below.
NGO, Education, And Religious Institutions’ Vehicle
NGOs often work for the betterment of society. There are numerous NGOs all over the U.S, including Arizona. Therefore, to appreciate good work and encourage them, their vehicles have a vehicle license tax exemption. It also minimizes their annual costs of operation to work effectively.
Educational institutes are the backbone of any society and shape their future. The future of Arizona daily goes to educational institutes, and thus their vehicles receive an exemption from the VLT. It allows those institutes to encourage and inspire the students.
Arizona is home to a wide variety of different religions, and in Arizona law, their vehicles are exempted from Vehicle License Tax as well.
EV Vehicles
Several automobile manufacturers focus on alternative fuel and electric or hybrid vehicles. To encourage makers and people to adopt EV or hybrid cars, the state law has exempted them from VLT.
So, if you want to avoid VLT, get an EV or a vehicle that runs on alternative fuels. This means you could get an electric vehicle like a Tesla, a natural gas truck, or a plethora of other vehicles.
Veterans Are Exempted
Veterans are held in high regard, and that is rightfully so. They have many exclusive offers available to them. If you’re an entirely disabled veteran, you might be exempted from the VLT. The state law also exempts survivors of fallen first responders and military members. There are also other military exemptions for VLT.
Do I Have To Pay Vehicle License Tax (VLT) Monthly?
No, the VLT isn’t a monthly fee. Arizona drivers have to pay it annually. The registration fee is $8, while the title fee is $4. The emissions process has varying pricing and doesn't necessarily happen every year that you process a vehicle registration renewal.
The vehicle license tax is the most expensive, which we have calculated above for $100,000 worth of a new car ($1,680). For a one-year-old car of the same worth, this tax is $1,465.
Arizona does not have a personal property tax like other states. This is beneficial because this is one less way you will get taxed.
Vehicle Emissions Test
A vital portion of the Arizona car registration process is the vehicle inspection of emissions. This is to help regulate and reduce overall emissions from cars in the state of Arizona. Almost five million people are living in the Phoenix metro area, so it only makes sense to regulate emissions.
The Arizona Department of Environmental Quality has jurisdiction over the emissions testing in Arizona as well as the laws governing the process. There are a complex set of rules to determine if you need an emissions test when you receive your renewal notice before the expiration date of your Arizona vehicle registration.
Vehicle emissions have varying prices, but more often than not it is around $17 and this is paid at the facility when you go and get your emissions tested.
Final Thoughts
The tax for vehicles is paid at the time of registration. The purchase of a title certificate is required before a car can be sold or transferred. This ensures that all fees are paid and that the car is legally allowed to be possessed.
The significant tax is Vehicle License Tax VLT. It is higher for expensive and new vehicles while lower for old and inexpensive cars.