Maryland Sales Tax on Cars: Rates, Trade-Ins, and Exemptions

Maryland’s sales tax on cars is a 6.5% excise tax collected by the Motor Vehicle Administration (MVA) when a vehicle is titled.¹ It applies whether you buy from a dealer or a private seller, and it has to be paid before the MVA will issue a certificate of title.² On a $30,000 vehicle, that comes to $1,950 in tax alone, before title and registration fees. The rate is the same statewide; no county or city can add its own vehicle sales tax on top.

The Current Rate

Maryland raised the motor vehicle excise tax from 6% to 6.5% effective July 1, 2025.¹ If you see older guides quoting 6%, they’re out of date. The purchase or contract date sets the rate: vehicles bought before July 2025 use the old rate, everything after uses 6.5%.

How the Taxable Value Is Calculated

Maryland doesn’t just tax the number you and the seller agree on. For vehicles less than seven model years old, the MVA compares your purchase price against the vehicle’s book value from recognized pricing guides and taxes you on whichever is higher. It’s a guardrail against buyers understating the price on a bill of sale.

Buy a three-year-old SUV for $24,000 with a book value of $27,000, and you pay 6.5% on $27,000 ($1,755). Pay $30,000 for the same SUV and the tax runs on the higher purchase price ($1,950). The MVA won’t credit you for overpaying, and it won’t accept a lowball figure either.

For vehicles seven model years old or older, the book value check drops away and the tax is based on the actual purchase price. There is a floor: the MVA applies a minimum taxable value of $640, so the smallest possible excise tax is roughly $42 even on a $200 clunker.¹

Rebates Don’t Reduce the Tax

Manufacturer rebates and dealer incentives don’t lower the taxable value. If a car stickers at $35,000 with a $2,000 factory rebate, your out-of-pocket is $33,000 but the tax is still figured on $35,000. Maryland treats the rebate as a payment from the manufacturer to you, not as a discount on the vehicle.

Leased Vehicles

When you lease, the excise tax is based on the full purchase price of the vehicle, not the sum of your monthly payments. You pay the same 6.5% as an outright buyer, and it’s collected at titling rather than spread across the lease.

Trade-In Credit

Trading in a vehicle at a Maryland dealer reduces the taxable amount. The trade-in value is subtracted from the purchase price before the excise tax is calculated.³ Buy a $40,000 car with a $12,000 trade-in and you’re taxed on $28,000 ($1,820) instead of $40,000 ($2,600).

The condition: both transactions have to run through the same dealership. The dealer deducts the trade-in and reports the net taxable price to the MVA.³ Sell your old car privately first and you lose the credit. If the dealer’s trade-in offer is only slightly under private-sale value, the tax savings can still make the dealer route the better deal.

Gift Transfers Between Family Members

Maryland waives the excise tax on a genuine gift of a vehicle between qualifying family members.⁴ Genuine means no money or other value changes hands. The qualifying relationships are:

Spouse
Parent, stepparent, or parent-in-law
Child, stepchild, adopted child, or child-in-law
Grandparent
Grandchild
Sibling or half-sibling
Aunt or uncle age 65 or older giving to a niece or nephew

That last one trips people up. An uncle who’s 64 giving a car to a nephew owes the full excise tax. The same uncle at 65 does not. The MVA requires a completed Application for Maryland Gift Certification, and the aunt/uncle transfer also needs form VR-299.⁴

When a vehicle has co-owners, every co-owner giving it and every co-owner receiving it must meet the relationship test. One exception: spouses who co-own a vehicle can gift it to one spouse’s parent, and it still counts as a child-to-parent transfer even though the other spouse isn’t the parent’s child.⁴

Moving to Maryland With a Vehicle

New residents bringing a vehicle titled in another state have 60 days from the date they establish Maryland residency to title and register it here.⁵ Meet that deadline and you get a credit for the excise or sales tax you already paid in your previous state.

How the credit shakes out:⁶

If your previous state’s rate was 6.5% or higher, you pay a flat $100 minimum excise tax.
If it was below 6.5%, you pay the difference between what you already paid and Maryland’s rate. Coming from Virginia at 4%, that’s 2.5% of the vehicle’s retail value.

Miss the 60-day window and the credit disappears. You’d owe the full 6.5% with no offset, plus risk a citation for driving on an out-of-state registration.⁵ On a $25,000 vehicle, that’s a $100 tax bill turning into $1,625.

Active-Duty Militaryh2>

Active-duty military members get a full exemption from the excise tax when titling a vehicle in Maryland, provided it was previously titled and registered in another state in the servicemember’s name.⁷ The exemption covers all branches, including the Coast Guard, the commissioned corps of the Public Health Service, and NOAA.

Separately, the federal Servicemembers Civil Relief Act shields servicemembers from personal property tax on vehicles in a state where they’re stationed but not domiciled. A servicemember stationed at Fort Meade but domiciled in Texas can’t be taxed on the vehicle as Maryland personal property. A spouse gets the same protection and can elect the servicemember’s domicile state.

Electric Vehicles

Maryland offers a one-time excise tax credit for zero-emission plug-in electric and fuel cell vehicles titled for the first time between July 1, 2023 and July 1, 2027. The credit is $3,000 for four-wheeled EVs, $2,000 for three-wheeled electric motorcycles, and $1,000 for two-wheeled electric motorcycles. Plug-in hybrids don’t qualify.⁸

One practical catch: funding for fiscal year 2026 is already exhausted.⁸ The program depends on annual appropriations, so check the MVA’s credit page before assuming it’s available. The next fiscal year starts July 1, when funding may reopen.

EV owners also pay an added annual registration fee: $125 for fully electric vehicles and $100 for plug-in hybrids. These fees are adjusted for inflation starting in fiscal year 2026 and are meant to offset the road-maintenance revenue gasoline vehicles generate through fuel taxes.

Other Exemptions

A handful of narrower exemptions apply beyond family gifts and military transfers.⁷ The main categories:

Vehicles owned by the federal government, the State of Maryland, or any Maryland political subdivision
Ambulances, rescue vehicles, and fire apparatus operated by nonprofit squads or departments
Vehicles owned and held for public use by units of national veterans’ organizations
Vehicles used to transport individuals with disabilities, owned by qualifying state-funded nonprofits
School buses owned by 501(c)(3) religious organizations or private schools, and vehicles acquired by qualifying charities for transfer to eligible individuals
Vehicles acquired by insurance companies through comprehensive or collision claims

Most of these require documentation filed with the MVA or the Comptroller. Get the exemption certificate before purchase; chasing a refund afterward is harder.

Paying the Tax

The excise tax is due at titling.² The process depends on how you bought the vehicle:

Dealer purchases: the dealer collects the excise tax, title fee, and registration fee at closing and submits the paperwork. Maryland law requires dealers to submit title work within 30 days of delivering the vehicle.⁹
Private sales: you handle it at an MVA branch. Bring the signed-over title, a bill of sale (notarized if the vehicle is less than seven years old), an odometer disclosure, and proof of Maryland insurance.¹⁰
New residents: title within 60 days. Bring the same documents as a private sale, plus proof of Maryland residency and evidence of tax paid in your previous state.⁶

The MVA accepts cash, checks, and credit cards. For private sales on vehicles under seven model years old, the notarized bill of sale is what the MVA uses to check purchase price against book value.¹⁰ Get it notarized before you go, or plan on a second trip.

Other Fees to Expect

The 6.5% excise tax is the largest line item, not the only one. Budget for:

Title fee of $200 for a new or used certificate of title.¹¹
Annual registration of $120.50 for cars up to 3,500 lbs, $125.50 for 3,501 to 3,700 lbs, and $191.50 above 3,700 lbs, including a $40 EMS surcharge.¹¹
Safety inspection for most used vehicles being titled, paid to the inspection station; fees vary.
Lien recording fee if you’re financing.

For a 4,000-pound car bought at $30,000, that adds up to roughly $1,950 in excise tax, $200 for the title, and $191.50 for registration, plus inspection. Around $2,350 before insurance and any dealer documentation fees.

1
Maryland Motor Vehicle Administration. Industry Bulletin – HB 352 (BRFA) (2025) Changes
2
Maryland General Assembly. Maryland Transportation Code Section 13-808 – When and to Whom Tax Payable
3
LII / Legal Information Institute. Md. Code Regs. 11.15.33.06 – Applying the Trade-in Allowance
4
Maryland Motor Vehicle Administration. Titling – Gift to Family Member
5
Maryland Motor Vehicle Administration. Titling – Out-of-State Vehicle Moved to MD by Owner
6
Maryland Motor Vehicle Administration. New to Maryland
7
Maryland General Assembly. Maryland Code Transportation – 13-810
8
Maryland Motor Vehicle Administration. Excise Tax Credit for Plug-in Electric Vehicles
9
Maryland Motor Vehicle Administration. Dealer – Fines for Late Submission of Title Work
10
Maryland Motor Vehicle Administration. Application for Certificate of Title
11
Maryland Motor Vehicle Administration. MVA Fee Listing