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HB 5540

AN ACT CONCERNING THE SALES PRICE THRESHOLD OF MOTOR VEHICLES SUBJECT TO A HIGHER SALES AND USE TAXES RATE.

2025 Regular Session Introduced by Jay Case

Raises motor vehicle sales tax threshold from $45,000 to $50,000, reducing taxes for consumers buying vehicles between those prices.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
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Bill Summary · HB 5540

Summary of HB 5540: Motor Vehicle Sales Tax Threshold

Bill Overview

HB 5540 is a bill that proposes to increase the sales price threshold at which a higher sales and use tax rate applies to the sale of motor vehicles in the state. The current threshold is set at $45,000, and this bill would raise that limit to $50,000.

Key Provisions

  • Raises the sales price threshold for the higher motor vehicle sales and use tax rate from $45,000 to $50,000
  • The higher sales tax rate of 7.75% (rather than the standard 6.35%) would only apply to vehicles priced above $50,000, up from the current $45,000 threshold
  • This change would take effect on October 1, 2025 if the bill is passed into law

Impact

  • Consumers purchasing motor vehicles priced between $45,000 and $50,000 would pay the lower 6.35% sales tax rate rather than the higher 7.75% rate
  • This could provide tax savings of up to $325 for consumers buying vehicles in that price range (the difference between 7.75% and 6.35% on a $50,000 vehicle)
  • The state may see a modest decrease in sales tax revenue from motor vehicle purchases, though the exact fiscal impact is unclear

Next Steps

HB 5540 has been referred to the Joint Committee on Finance, Revenue and Bonding for further consideration and potential amendment. If approved by the committee, the bill would then go to the full state legislature for a vote.

Compiled from official sources — confirm details with the bill’s official record.

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