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FAQ Articles

Are licensed motor vehicles subject to state and local sales tax?

Sales: The sales of licensed motor vehicles, including trailers and semi-trailers, are subject to a 5 percent motor vehicle excise tax instead of state and local sales taxes. Licensed motor vehicles are not subject to local option taxes.

The motor vehicle excise tax is imposed on the purchase price of any motor vehicle that must be registered in North Dakota for use on the highways and streets of this state. The purchaser of a motor vehicle is responsible to license the vehicle and pay the motor vehicle excise tax to the Motor Vehicle Division of the North Dakota Department of Transportation at the time of registration if the dealer did not collect the tax as a convenience for the customer.

Off-highway vehicles including snowmobiles and all-terrain vehicles (ATVs) that will be used on land other than that owned or leased by the owner must be registered with the Motor Vehicle Division and will be subject to the 5 percent motor vehicle excise tax at the time of registration.

Snowmobiles and ATVs purchased at retail that will not be registered with the Motor Vehicle Division are subject to the state and local sales tax, which should be collected by the retailer at the time of the sale.

Lease: Motor vehicles with an actual vehicle weight of 10,000 pounds or less and placed into lease service for periods of one year or more are subject to the 5 percent motor vehicle excise tax. Local taxes do not apply to the lease of motor vehicles. The owner or lessor is responsible to pay the tax based on the total consideration of the lease. Vehicles with an actual vehicle weight of more than 10,000 pounds or are leased for periods of less than one year are subject to the 5 percent motor vehicle excise tax based on the lessor’s purchase price.

Please refer to our Lease or Rental of Motor Vehicles guideline for additional information on the lease of motor vehicles.

Rental: Motor vehicles purchased for the purpose of rental are subject to the 5 percent motor vehicle excise tax at the time the vehicles are licensed with the Motor Vehicle Division. In addition to the Motor Vehicle Excise Tax, a 5 percent sales tax and 3 percent rental surcharge are imposed on rentals of motor vehicles if the vehicle is rented for periods of less than 30 days and the motor vehicle has a gross vehicle weight of 10,000 pounds or less.

Several cities in North Dakota collect a 1% Motor Vehicle Rental Tax on the rental value of a motor vehicle. To qualify as taxable, the vehicle must be either picked up at the airport or the customer is picked up at the airport and taken to an off-site rental location.

Please refer to our Lease or Rental of Motor Vehicles guideline for additional information on the lease of motor vehicles.

nd.gov - The Official Portal for North Dakota State Government
North Dakota: Legendary. Follow the trail of legends

Ryan Rauschenberger
Tax Commissioner
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FAQ Articles

Are licensed motor vehicles subject to state and local sales tax?

Sales: The sales of licensed motor vehicles, including trailers and semi-trailers, are subject to a 5 percent motor vehicle excise tax instead of state and local sales taxes. Licensed motor vehicles are not subject to local option taxes.

The motor vehicle excise tax is imposed on the purchase price of any motor vehicle that must be registered in North Dakota for use on the highways and streets of this state. The purchaser of a motor vehicle is responsible to license the vehicle and pay the motor vehicle excise tax to the Motor Vehicle Division of the North Dakota Department of Transportation at the time of registration if the dealer did not collect the tax as a convenience for the customer.

Off-highway vehicles including snowmobiles and all-terrain vehicles (ATVs) that will be used on land other than that owned or leased by the owner must be registered with the Motor Vehicle Division and will be subject to the 5 percent motor vehicle excise tax at the time of registration.

Snowmobiles and ATVs purchased at retail that will not be registered with the Motor Vehicle Division are subject to the state and local sales tax, which should be collected by the retailer at the time of the sale.

Lease: Motor vehicles with an actual vehicle weight of 10,000 pounds or less and placed into lease service for periods of one year or more are subject to the 5 percent motor vehicle excise tax. Local taxes do not apply to the lease of motor vehicles. The owner or lessor is responsible to pay the tax based on the total consideration of the lease. Vehicles with an actual vehicle weight of more than 10,000 pounds or are leased for periods of less than one year are subject to the 5 percent motor vehicle excise tax based on the lessor’s purchase price.

Please refer to our Lease or Rental of Motor Vehicles guideline for additional information on the lease of motor vehicles.

Rental: Motor vehicles purchased for the purpose of rental are subject to the 5 percent motor vehicle excise tax at the time the vehicles are licensed with the Motor Vehicle Division. In addition to the Motor Vehicle Excise Tax, a 5 percent sales tax and 3 percent rental surcharge are imposed on rentals of motor vehicles if the vehicle is rented for periods of less than 30 days and the motor vehicle has a gross vehicle weight of 10,000 pounds or less.

Several cities in North Dakota collect a 1% Motor Vehicle Rental Tax on the rental value of a motor vehicle. To qualify as taxable, the vehicle must be either picked up at the airport or the customer is picked up at the airport and taken to an off-site rental location.

Please refer to our Lease or Rental of Motor Vehicles guideline for additional information on the lease of motor vehicles.

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