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Alabama Department of Revenue - Property Tax - Vehicles

Vehicles

The Vehicle Valuation Section is primarily responsible for providing market values to each county in Alabama. These values are used by the county tag offices to calculate the ad valorem taxes on motor vehicles.

Ad valorem taxes on motor vehicles are assessed and collected forward on a current basis to coincide with the collection of motor vehicle registration fees. All accrued ad valorem tax on a motor vehicle must be collected prior to the vehicle registration in accordance with Section 40-12-253, Code of Alabama 1975.

Upon the sale, trade, total destruction, permanent removal from Alabama, theft without recovery, or other transfer of a motor vehicle constituting Class I, Class II or Class IV property under Section 40-8-1 the owner of such motor vehicle will be entitled to a pro rata credit for the ad valorem taxes paid for the remainder of the then current period for which such taxes have been paid. The owner has sixty (60) days to claim the credit voucher from the date the vehicle is sold, traded, totally destroyed, permanently removed from Alabama, stolen without recovery or transferred to claim the credit voucher in the county in which the taxes were originally paid. The credit voucher is valid for twelve (12) months from the date of issuance. The original credit voucher must be submitted to the tax collecting official at the time of registration or renewal to receive the credit. There is a two ($2.00) dollar fee collected when a credit voucher is redeemed.

Ad valorem tax is a property tax, not a use tax, and follows the property from owner to owner. Therefore, unlike registration fees, taxes accumulate even when a vehicle is not used on the highway.

To calculate the assessed value for a motor vehicle, multiply the market value by the appropriate assessment and the applicable millage rate.

Alabama law outlines four classes of property for ad valorem tax purposes, three of which apply to motor vehicles:

  • Class IV Motor Vehicles 15% This class includes all private passenger motor vehicles including private passenger motor vehicles under lease-purchase option contractual agreements, motor vehicles registered in the name of a beneficiary of a trust, station wagons, sport utility vehicles (regardless of weight) vans and “pickup” trucks to include all private passenger “pickup” trucks under lease-purchase option contractual agreement, which weigh eight thousand (8,000) pounds gross vehicle weight or less that are owned and operated by an individual for personal or private use and not for hire, rent or compensation.
  • Class I Motor Vehicles 30% This class includes all motor vehicles owned by public utilities and used in the business of such utilities.
  • Class II Motor Vehicles 20% This class includes all motor vehicles that do not fall within the definition of either Class IV or Class I motor vehicles. This class includes motorcycles, utility trailers, recreational vehicles, leased vehicles not for private use, leased vehicle without a lease-purchase option contractual agreement, trucks weighing more than eight thousand (8,000) pounds gross vehicle weight and all vehicles used for commercial purposes.
The assessment of vehicles is covered in Section 40-12-253. Please refer to our Administrative Rules page for specific standards and requirements.

For more information regarding vehicles, view our Faq's page.