taxes

Motor Vehicle Tax Guide

Purchase of Motor Vehicles for Rent

All persons offering motor vehicles for rent must register with the Comptroller’s office for a Texas Motor Vehicle Rental Permit. There are two types of rental permit holders: qualified and non-qualified.

The county tax assessor-collector (CTAC) can verify a Texas Motor Vehicle Rental Permit on our Taxpayer Status Search webpage.

Qualified Permit Holder Registration Requirements

A qualified permit holder is someone who holds a dealer’s license issued by the Texas Department of Motor Vehicles (TxDMV) or is the titled owner of at least five different motor vehicles held for rental in a 12- month period. Qualified permit holders may title or register a motor vehicle tax-deferred.

Qualified permit holders are allowed to title or register a motor vehicle held for rental without paying motor vehicle tax at the time of titling or registration.

A qualified permit holder may show a fair market value deduction on the Form 130-U, Application for Texas Title and/or Registration (PDF), to reduce the total consideration being paid on the purchase of a new motor vehicle.

Before the CTAC may accept a Form 130-U (PDF) for a rental vehicle for tax-deferred registration, the following must occur:

• the seller and purchaser must complete the Form 130-U (PDF);
• the seller or purchaser must include the rental permit number in Box 35 on the Form 130-U (PDF); and
• the seller and the purchaser both must sign the certification statement at the bottom of the form.

Non-Qualified Permit Holder Registration Requirements

Non-qualified permit holders must pay motor vehicle sales and use tax at the time of titling or registration.

A non-qualified permit holder may show a trade-in on the Form 130-U (PDF) to reduce the total consideration being paid on the purchase of a new motor vehicle.

Texas Emission Reduction Plan (TERP) Surcharge

The purchase or use of a diesel-powered motor vehicle with a gross registered weight of more than 14,000 pounds is subject to the TERP surcharge. The rate is 1 percent of the total consideration paid for the vehicle (model years 1997 and later) or 2.5 percent of the total consideration paid for the vehicle (model years prior to 1997).

For motor vehicles subject to the TERP surcharge, the surcharge is due at the time of titling or registration and cannot be deferred.

96-254
(09/2021)