Ad Valorem taxes on motor vehicles shall become due and payable on the first day of the registration renewal month of the owner, the date the motor vehicle enters the State of Alabama, the date the motor vehicle is removed from the inventory of a dealer, or the date on which the motor vehicle is otherwise determined to be taxable, whichever comes first. Ad Valorem taxes on motor vehicles shall become delinquent on the first day of the month following the registration renewal month for the owner or as otherwise provided by law.

No license shall be issued to operate a motor vehicle on the public highways of this state, nor shall any transfer be made by the licensing official under this article, until the ad valorem tax on the motor vehicle is paid in the county, as evidenced either by a receipt of the tax collecting official where the owner of the motor vehicle resides, if the motor vehicle is owned by an individual, or by the receipt of the tax collecting official in the county where the vehicle is based.

Alabama law outlines four classes of property for Ad Valorem tax purposes, three of which apply to motor vehicles. The yearly Ad Valorem, or Property Tax, is based on the values assigned by the State of Alabama Department of Revenue. According to Act 1999-363 (STARS Act), if back taxes are owed on a motor vehicle, they must be paid before the owner can register the vehicle. The county taxing official shall determine the amount of taxes owned on the vehicle from the information provided by the owner. If the number of months of delinquent taxes cannot be determined, the motor vehicle shall be presumed to have been in the state for one preceding year plus the current year. When the number of delinquent months can be determined, a motor vehicle can be subject to payment of escaped taxes for up to two prior years (24 months) plus the current tax year.

As specified by law (Code of Alabama 40-8-1), the assessed value of automobiles for tax purposes is either 15% or 20% of the market value. The three ad valorem classes which apply to vehicles are as follows:

1. Class IV Motor Vehicles (15%) – Includes all private passenger motor vehicles to include private passenger vehicles under lease-purchase option, vehicles registered in name of a trust or beneficiary, station wagons, sport utility vehicles, vans and “pickup” trucks with an option to purchase, which weigh eight thousand(8,000) pounds gross vehicle weigh (GVW) or less that are owned and operated by an individual for personal or private use and not for hire, rent, or compensation.
2. Class I Motor Vehicles (30%) – Includes all motor vehicles owned by public utilities and used in the business of such utilities.
3. Class II Motor Vehicles (20%) – Includes all motor vehicles that do not fall within the definition of either Class IV or Class I motor vehicles. This class includes motorcycles, utility trailers, recreational vehicles, leased vehicles not for private use and without lease-purchase option contractual agreements, trucks weighing more than eight thousand (8,000) pounds gross weigh, and all vehicles used for commercial purposes.

Calculating Ad Valorem Tax

The market value of a vehicle is determined by the Alabama Department of Revenue.

First determine the property class of the vehicle (i.e., Class IV, Class I or Class II)

Multiply the market value times the Property Class of the vehicle.

Then multiply the Assessed value times the Millage Rate (see chart below) of your residence to calculate the Ad Valorem tax for 12 months.

Example:

Market Value= $20,000

Property Class IV (15%)                          

Market Value  x    Property Class   =    Assessed Value 

      $20,000     x          15%               =     3,000

Residence Location = City of Huntsville - Millage Rate  0.058                                

Assessed Value  x     Millage rate   =    Ad Valorem

3,000                   x      0.058     =           $174.00  Ad Valorem amount for 12 months

AD VALOREM TAX - CREDIT VOUCHER

Upon the sale, trade, total destruction, permanent removal from Alabama, theft without recovery, or other transfer of a motor vehicle constitution Class I, Class II, or Class IV Property under Section 40-8-1, the owner of such motor vehicle shall be entitled to a prorata credit for the ad valorem taxes paid with respect thereto for the remainder of the then current period for which such taxes have been paid. The Ad Valorem credit so determined shall, to the full extent, either (1) be allowed at the election of the said owner on a pro rata basis against all ad valorem taxes payable on another motor vehicle or vehicles acquired by the owner in conjunction with the sale or trade of the motor vehicle in respect of which the credit is allowable, or (2) be evidenced by a serially-number credit voucher bearing the name of the person entitled to said credit, which may for a period of twelve months from the date of issuance be presented to the collecting officials whose office shall have collected the ad valorem taxes. In the event a voucher is presented for credit against ad valorem taxes due and the amount of the voucher is in excess of said taxes due, a new voucher for the excess amount shall be issued referencing the date of issuance of the voucher presented, which may be used against ad valorem taxes on another vehicle but no later than the original expiration date.