Boat Sales Tax by State: Rates, Caps and Exemptions

Why boat tax varies so much

A few states tax a boat like any other purchase at the full sales tax rate. Others carve boats out with a lower rate, a dollar cap, or both. The cap is the number that matters on anything expensive. A low rate with no cap can cost far more than a higher rate with a hard ceiling.

Watch two other details. Buy out of state and your home state usually wants use tax when you title, minus credit for tax legally paid elsewhere. And several states tax the trailer under motor vehicle rules.

Florida: 6% plus county surtax, capped at $18,000

Florida charges its 6% sales and use tax on boats sold, delivered, used or stored in the state, plus any county discretionary surtax. The surtax only applies to the first $5,000 of the price. Total tax on one boat sale cannot go over $18,000, state and county combined. The Department of Revenue's TIP 10A01-07 walks through a $1,000,000 sale in a 1% surtax county: $50 of county surtax and $17,950 of state tax, $18,000 in all.

Buy from a private seller instead of a registered dealer and you still owe Florida use tax when you title or register. The same goes for a boat bought in another state and brought into Florida within six months of purchase. Florida gives credit for like tax paid to another state, so a buyer who paid 4% elsewhere owes the 2% difference plus surtax.

Nonresidents buying from a Florida dealer or broker can skip the tax by signing a removal affidavit and taking the boat out of state on schedule, 10 days for a boat under 5 net tons. Browse boats for sale in Florida with the $18,000 cap in mind if you are shopping above about $300,000.

Texas: 6.25%, capped at $18,750 per sale

Texas has a separate boat and boat motor sales and use tax at 6.25%, with no local tax added. It covers motorboats, sailboats and personal watercraft 115 feet or shorter, plus gas or diesel outboards. Trade-in value of another boat or motor comes off the taxable price. On each sale, the boat tax collected cannot exceed $18,750.

Read the Comptroller's example closely. A $350,000 boat sold with two $9,000 outboards hits the $18,750 cap on the boat, but each outboard still owes $562.50. The total is $19,875. Trailers fall under motor vehicle tax instead.

If the dealer does not collect, you pay when you title and register with Texas Parks and Wildlife or a participating county tax office. TPWD says it is due within 45 working days of the sale. Texas residents who buy out of state owe the 6.25% use tax with credit for tax paid elsewhere, and the Comptroller states there is no cap on use tax. New residents bringing a boat they already own pay a flat $15 instead. Start your search on the Texas boats for sale page.

North Carolina: 3%, capped at $1,500

North Carolina keeps boat tax low. The NC Department of Revenue applies a 3% rate to the sales price, with a maximum of $1,500 per boat. Local and transit sales taxes do not apply. The cap kicks in at a $50,000 price, so most family boats above that pay the same $1,500.

The taxable price includes accessories attached at delivery, such as the motor, controls, windshield, horn and lights, along with installation and freight. A trailer is treated as a separate motor vehicle that is exempt from sales tax but subject to the highway use tax, paid when the trailer is titled. See current North Carolina listings.

South Carolina: 5%, capped at $500

South Carolina's cap is the lowest of the six. The Department of Revenue's casual excise tax is due when a title or other proof of ownership is issued for a boat or boat motor. The rate is 5% of fair market value and the tax cannot exceed $500. No local tax is added. The cap is reached on a $10,000 boat.

SCDNR's titling page adds the practical bits. A boat and motor bought together from the same owner pay 5% with one $500 maximum. A motor bought alone also pays 5% up to $500. If you did not pay tax out of state, you send the tax along with the registration fee. Boats and motors acquired from immediate family, meaning a parent, child, sibling, grandparent, grandchild or spouse, are exempt using the form on the back of the application. Look through South Carolina boats for sale to compare.

Michigan: 6% at registration

Michigan collects 6% sales tax on watercraft. Dealers handle title and registration and collect it at the sale. Buy from a private seller and the Department of Treasury says use tax is due, paid to the Secretary of State before the registration is transferred. Transfers between a spouse, parent, child, sibling, grandparent, grandchild, step-relative or legal ward are exempt. The state pages I checked list no boat-specific cap.

Michigan requires a title on watercraft 20 feet or longer and on any boat with a permanently affixed engine, regardless of length. Browse Michigan boats for sale.

New York: tax only on the first $230,000

New York does not lower its rate for boats. You pay the normal combined state and local rate. Since June 1, 2015, anything above $230,000 of a vessel's price is exempt. The capped price includes the boat, gear needed to run it, an outboard and trailer sold with it, and the seller's delivery charges, less any trade-in.

Residents who buy out of state owe use tax on the first of three triggers: when the boat must be registered with DMV, when it is actually registered, or when it has been used in New York for more than 90 consecutive days. Credit for tax paid to another state is limited to tax on $230,000. In the Tax Department's example, a resident in an 8⅝% jurisdiction owes $19,837.50 on an $800,000 boat. Paying $48,000 at 6% in the other state earns a credit of only $13,800, which leaves $6,037.50 due. Compare current New York listings before you shop elsewhere.

Paperwork that saves money

• Get a signed bill of sale with the price, date, HIN and engine serial numbers.
• Split the boat, motor and trailer prices on the invoice. Several of these states tax them differently.
• Keep the receipt for any tax paid in another state. Florida, Texas and New York all credit it, with limits.

Tax rules and caps change with each legislative session. Treat these figures as a starting point, and confirm the current amount with the state revenue department or titling office before you close.