Excise Tax

An excise tax is a government-imposed levy applied to vehicles, typically collected annually or biennially as part of registration. Unlike sales tax, which is charged only at the time of purchase, excise taxes are recurring and are usually based on the vehicle’s age, weight, or market value.

Newer and more expensive vehicles often incur higher excise taxes, while older cars are assessed at lower amounts. Excise tax revenue is generally earmarked for infrastructure, road maintenance, and municipal services.

The tax ensures that vehicle owners contribute to the upkeep of the transportation system proportionally to the type or value of the vehicle they drive. Buyers should account for excise tax as an ongoing cost of ownership, especially in states where it is significant.

Since it is a mandatory fee, failing to pay excise tax can result in registration suspension, fines, or additional penalties.