Taxes on Unrepaired Salvage Vehicles
98-776
Glenn Hegar Texas Comptroller of Public Accounts
(09/20)
Salvage Vehicles: What Tax is Due?
Unrepaired salvage vehicles are tangible personal property and do not meet the definition of a motor vehicle in the Texas tax code. When you buy an unrepaired salvage vehicle in Texas, you owe limited sales and use tax (6.25 percent state tax, plus up to 2 percent local tax) and not motor vehicle tax.
A "salvage vehicle" is a vehicle that
? has damage to, or is missing, a major component part ? to the extent that the cost of repairs
exceeds the actual cash value of the motor vehicle immediately before the damage;
? is declared a total loss by an insurance company; or ? is certified as abandoned or nonrepairable by the Texas Department of Motor Vehicles (TxDMV).
If you buy an unrepaired salvage vehicle from a Texas seller who does not charge you sales tax, or if you buy an unrepaired salvage vehicle outside Texas for use in this state, you must pay use tax directly to the Comptroller's office.
You owe motor vehicle sales and use tax when you buy a repaired salvage vehicle that has passed a Texas Department of Public Safety vehicle inspection, qualifying it as a motor vehicle that is eligible for a regular (or "clear") title from the TxDMV.
If you have any questions, please contact our office at Comptroller., toll free at 800-252-1382 or at comptroller.web-forms/tax-help/.
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