North Dakota Car Sales Tax: The 5 Percent Excise, Credits and Exemptions

North Dakota does not charge sales tax on cars. It charges a 5 percent motor vehicle excise tax instead, on the purchase price less any trade-in, and the NDDOT Motor Vehicle Division collects it when you apply for the title. The tax also reaches vehicles bought or acquired outside the state for use on North Dakota roads, so a car arriving with a new resident can owe it unless tax paid in another state is credited.

This guide covers how the excise is figured, what it means for a car you already own, the credit for tax paid elsewhere and its limits, the open question for cars taxed in New York, what a North Dakota buyer pays on a car from another state, the exemptions and the military rules. If you are moving a car from New York, our page on New York to North Dakota car shipping covers the lane itself. The rules come from chapter 57-40.3 of the North Dakota Century Code, the North Dakota Department of Transportation (NDDOT) and its Motor Vehicle Registration Manual, the Office of State Tax Commissioner and the New York State Department of Taxation and Finance.

Does North Dakota Charge Sales Tax on Cars?

No. Section 57-40.3-02 of the North Dakota Century Code imposes an excise tax of five percent on the purchase price of a motor vehicle bought or acquired in or outside the state for use on its streets and highways, when the vehicle has to be registered there. Vehicles taxed under that law are exempt from the state sales tax, and the Tax Commissioner's page on special taxes describes the motor vehicle excise as applying instead of state and local sales taxes.

The Tax Commissioner administers the tax, and the NDDOT Motor Vehicle Division collects it as the commissioner's agent. Apart from a few listed exceptions, section 57-40.3-07 bars NDDOT from issuing a title or registration until the tax is paid, so the excise is settled at the same appointment where the car gets its North Dakota title.

How Is the 5 Percent Excise Figured?

The base is the purchase price, which the statute defines as the total amount paid for the vehicle, in money or otherwise. A trade-in allowed by the seller comes off before the rate is applied, and NDDOT's registration manual asks for the traded vehicle's year, make and VIN. The manual applies the tax to a car bought from a licensed dealer and to one bought from a private seller alike.

Take a car bought for $24,000 with a $6,000 trade-in allowance. The taxable amount is $18,000, and 5 percent of that is $900, due when you apply for the title. The figures only illustrate the arithmetic.

Two other rules change the base. When a car arrives as a gift that does not qualify for an exemption, or for little or no payment, the purchase price includes the average value of similar vehicles from standards and guides set by the NDDOT director, and the registration manual names the National Automobile Dealers Used Car Guide. When a car was stolen or totally destroyed, section 57-40.3-01 allows the insurance compensation as a credit against a replacement purchase, supported by a notarized statement from the insurer given within three years.

Do New Residents Pay the Excise on a Car They Already Own?

Moving to North Dakota does not by itself exempt a car. None of the exemptions in section 57-40.3-04, and none of the 30 listed in NDDOT's registration manual, covers a vehicle a new resident owned before the move, and the manual's section on out-of-state vehicles says the excise is due on a vehicle purchased outside the state for use in North Dakota.

What usually decides the bill is the tax you already paid. Tax paid in another state can reduce or cancel the excise through the credit covered in the next section, and NDDOT's appointment checklist says proof of tax paid may be required. For a vehicle titled in Alaska, Delaware, Georgia, Montana, New Hampshire or Oregon, the same checklist says the tax is due on the fair market value, and a state rule applies fair market value to a car previously registered in any state with no sales or motor vehicle excise tax.

Timing matters for recent purchases. Under section 57-40.3-08, when the title or registration application reaches NDDOT within 30 days of the purchase, the car is presumed bought for use in North Dakota until the buyer shows otherwise, even if it was titled or registered in another state first. The statute does not say how a car bought years before the move is valued, so ask the Motor Vehicle Division how it will assess yours before the appointment.

There is one way to put off titling. Section 39-04-18.2 lets an owner employed in North Dakota buy a six or twelve month temporary registration permit instead of registering the car, as long as it keeps a valid out-of-state registration and plates and is insured, and a car on that permit is registered without a title transfer or the excise. Our North Dakota title and registration guide covers when you count as a resident, the permit fees and the full appointment.

How Does the Credit for Tax Paid in Another State Work?

Section 57-40.3-09 counts sales, use or motor vehicle excise tax already paid on the car in another state, including local tax there. If that tax is less than the North Dakota excise, you pay the difference. If it is the same or more, no North Dakota tax is due.

The credit has a condition. It applies only if the other state allows a credit for North Dakota's excise that is substantially similar to North Dakota's own, and the Tax Commissioner may require written proof that the tax was legally due and paid. NDDOT's title application, SFN 2872, lists the credit as tax paid to a state that grants reciprocity to North Dakota, with proof required.

NDDOT's Motor Vehicle Registration Manual names six states for which reciprocity cannot be granted: Alaska, Delaware, Georgia, Montana, New Hampshire and Oregon. Outside the United States, a car coming in from Canada is taxed on its fair market value when it is titled and registered, and an imported vehicle gets no credit for tax paid to another country.

Using the earlier example, if a state that grants North Dakota a similar credit had collected $600 on that purchase, North Dakota would charge the $300 difference, and nothing if that state had collected $900 or more.

How this plays out depends on the state where the tax was paid. For a car bought in Florida, our guide to Florida car sales tax covers Florida's side of the sale. New York is less clear, as the next section explains.

What If the Car Was Bought or Taxed in New York?

No official source we found answers this directly, and the documents point in different directions. On North Dakota's side, section 57-40.3-09 credits New York tax only if New York allows a substantially similar credit for North Dakota's excise. NDDOT's manual names six states it cannot credit, and New York is not among them, but that list does not say New York qualifies.

On New York's side, Form DTF-804, which New York residents use to claim credit for tax paid in another state, says New York gives a reciprocal credit on motor vehicles to a very limited number of states. Its motor vehicle chart, on the May 2015 version the Tax Department still posts, lists North Dakota under no New York State credit currently allowed. The New York DMV also notes that not all states have an agreement with New York.

Read together, those documents leave the decision with the Motor Vehicle Division. If the car was bought and taxed in New York, keep the proof of that tax: the dealer's paperwork showing the New York sales tax, or the sales tax receipt the New York DMV issues when it collects tax on a private sale. Ask the NDDOT Motor Vehicle Division before the appointment whether it will credit that tax, and plan for the possibility that the full 5 percent applies.

What Does a North Dakota Buyer Pay on a Car From Another State?

The excise at titling, less any credit that qualifies. A car bought in another state for use in North Dakota is taxed on its purchase price when you title it, and an application filed within 30 days of the purchase falls under the presumption above.

Buying from a New York dealer shows how the two states fit together. New York's bulletin on motor vehicles, vessels and trailers (TB-ST-590) exempts a nonresident buyer from New York sales tax when the buyer gives the seller Form DTF-820 at the time of sale and meets its conditions: no permanent place of abode in New York, no New York business use of the car and no New York registration, temporary included. With no New York tax paid, North Dakota has nothing to credit, so the full 5 percent is due at titling. Our guide to buying a car in New York as an out-of-state resident walks through DTF-820 and the in-transit permit.

If the dealer collects New York tax instead, for example because the buyer took a temporary New York registration, the credit question in the previous section applies. A car bought in a state with no sales or motor vehicle excise tax owes the excise on the full purchase price, under North Dakota's administrative rules.

Which Vehicle Transfers Are Exempt?

Section 57-40.3-04 lists the exemptions. These are the ones families and movers meet most often:

• Family gifts. A gift between spouses, parent and child, grandparent and grandchild, or brothers and sisters, including a transfer into a trust between those relatives.
• Inheritance. A car acquired by inheritance, bequest or the operation of a trust. NDDOT's manual adds that buying a car from an estate is taxed.
• Joint owners. A transfer without payment to one or more of the joint tenants the car was already titled to.
• Revocable living trusts. A transfer from the trust to the trustor or to the trustor's spouse, child or sibling.
• Divorce. A transfer to a former spouse under a divorce decree, within one year after the divorce became final. The manual asks for the decree.
• Temporary permits. A car kept on its out-of-state registration under the temporary permit in section 39-04-18.2.
• Insurance settlements. A damaged car transferred to an insurer to settle a claim.

Gifts carry paperwork. Sections 57-40.3-05 and 57-40.3-06 require a motor vehicle purchaser's certificate for a gift between spouses, parent and child, or brothers and sisters, and NDDOT's SFN 2475, Purchaser's Certification and Application, includes the gift selections. Submitting a false certificate, or none, brings a penalty of 5 percent of the tax that was due or $5, whichever is greater, under section 57-40.3-11. Other exemptions, such as those for qualifying disabled veterans and former prisoners of war with distinctive plates, carry their own conditions in the statute.

How Does the Excise Work for Military Members?

The rules turn on where the service member is a resident. Members stationed in North Dakota who keep residence elsewhere, at Minot or Grand Forks Air Force Base for example, may drive on their home-state registration and plates without North Dakota registration, under section 39-04-18. If they choose to title a car in North Dakota, the state's administrative rules say active-duty members in the state owe the excise. A car leased and registered in another state by a nonresident member stationed in North Dakota is exempt, and NDDOT's manual says the lease must have been made before entering the state, with the title in the leasing company's name.

North Dakota residents stationed out of state can title a car in North Dakota without paying the excise when the car is not intended for use in the state, and they claim that exemption on the Military Claim for Tax Exemption, SFN 17147. Separately, section 57-40.3-04 exempts a car transferred without payment to or from someone within 30 days before entering the armed services, while serving or within 30 days after discharge, provided the person certifies to NDDOT that the transfer happened for that reason.

What Should You Bring to Prove Tax Was Paid?

NDDOT's checklist says proof of tax paid may be required without listing what qualifies, so bring documents that show the tax itself, not just the price:

• The title application. SFN 2872, with the out-of-state title or your lender's details.
• Proof of tax paid elsewhere. A bill of sale or buyer's order showing the sales tax, or a tax receipt from the state that collected it.
• Trade-in details. The traded vehicle's year, make and VIN, so the allowance comes off the price.
• Exemption paperwork. SFN 2475 for a family gift, SFN 17147 for a military claim, or the divorce decree for a transfer to a former spouse.
• An insurer's statement. The notarized statement for a replacement car after a theft or total loss.

How Does Shipping Fit a Move or a Purchase?

The paperwork that settles the excise travels apart from the car, so keep the title, the bill of sale and any tax receipt with you rather than in the vehicle. Keep the signed bill of lading too, since it records when the car was picked up and delivered. If the car is leaving New York, the plates are a New York step, and our New York plate surrender guide explains why they go back before the New York policy is canceled.

Rivalane coordinates door to door transport to North Dakota with licensed, insured carriers. A carrier is typically assigned within one to three working days of booking, and pickup and delivery dates are estimates, not guarantees. Our pages on shipping a car from New York to North Dakota and Florida to North Dakota car shipping cover those lanes, our page on car shipping in North Dakota covers deliveries across the state, and the car shipping calculator prices the move.

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