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In place of ad valorem taxes, all registered vehicles are assessed a license tax fee as determined by the Director of Motor Vehicles. The fee is payable at the time of registration to the Department of Motor Vehicles. If the registration year is for less or more than 12 months, the fee for the vehicle will be adjusted. This fee is in place of all other state, county and municipal ad valorem taxes, and is due annually.
California assesses statewide sales and use tax. Many districts, counties, and cities levy their own sales and use taxes in addition to the statewide tax.
When purchasing motor vehicles in California, there is state sales tax due to the Department of Motor Vehicles when applying for registration or transfer of registration on the vehicle. Depending on the county tax where registering, the rate can vary.
Vehicles purchased out-of-state are subject to California sales and use tax. California allows credit for sales tax paid to another state, which only requires the purchaser to pay the difference in tax should California's tax rate be higher.
A truck or trailer purchase may qualify for an exemption from tax if the vehicle is purchased for use in interstate or foreign commerce and used as such. This includes certain new, used, or remanufactured trucks registered under the International Registration Plan (IRP). Certain criteria must be met for the purchase to qualify and detailed recordkeeping requirements apply.