HB20 Alabama 2015 2nd Special Session

Summary

Primary Sponsor

Ken Johnson

Republican

Session

Second Special Session 2015

Title

Sales tax, exemption for certain motor vehicles, motorcycles, trucks, and semi-trailers exported or removed from this state, eliminated under certain conditions, Sec. 40-23-2 am'd.

Summary

HB20 tightens Alabama's vehicle sales tax rules for exports or first use outside the state and ends ad valorem tax deferral, ensuring Alabama tax cannot exceed the other state's tax rate.

What This Bill Does

If a vehicle is sold to be titled or registered outside Alabama or used outside the state within 72 hours, Alabama sales tax applies but cannot exceed the tax that would be due in the state where the vehicle is first registered or titled. The tax collected remains Alabama sales tax (not county or municipal), and the law requires publication of states that do not allow drive-out provisions. Some vehicles (mobile homes, motorbikes, ATVs, boats) are not eligible for the export exemption unless documentation shows outside delivery, and forms approved by the Revenue Department must be used. The bill also ends deferral of ad valorem taxes on motor vehicles, creating the Motor Vehicle Ad Valorem Tax Fairness Act, and directs how a portion of the tax revenue is split between the Education Trust Fund and the State General Fund; the act takes effect January 1, 2016.

Who It Affects

• Alabama residents or purchasers who export or first use motor vehicles outside Alabama within 72 hours, as their Alabama tax liability will be capped at the rate that would be due in the other state and must be documented; local (county/municipal) taxes are not included in the export tax.
• Alabama state and local finances (Education Trust Fund and State General Fund) and vehicle retailers, due to the new tax distribution (58% to Education Trust Fund and 42% to the General Fund) and the elimination of ad valorem tax deferral.

Key Provisions

• The Alabama state sales tax on exported or first-used vehicles cannot exceed the amount of tax that would be owed in the state where the vehicle is first registered or titled.
• Exported/first-used vehicle sales are taxed at Alabama's rate, but county and municipal taxes are excluded; a list of states that do not allow drive-out provisions must be published each January 1 (starting 2016).
• Some vehicles (mobile homes, motorbikes, ATVs, boats) do not qualify for the export exemption unless the dealer can prove delivery outside Alabama; exemption documentation must be on Revenue Department forms.
• Of the total 0.02 tax on such sales, 58% goes to the Education Trust Fund and 42% goes to the State General Fund.
• The act removes deferral of ad valorem taxes on motor vehicles, addressing an identified loophole.
• The act is titled the Motor Vehicle Ad Valorem Tax Fairness Act and becomes effective January 1, 2016.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation