Last year, an elderly constituent contacted me, frustrated with the taxes she had to pay when buying a car.
When someone purchases a vehicle in Oklahoma, they pay tax on the total cost of the car, but they get no credit for the value of a trade-in. This equates to double taxation. The person paid a significant amount of tax on the trade-in vehicle when it was purchased, but they get no credit when they trade it in. Moreover, when the car traded in is resold, the state will tax it yet again. An illustration of this would be a person purchasing a used vehicle for $21,500. The motor vehicle excise tax in Oklahoma would be $670 regardless of the value of a trade-in. Now, let’s say the person trades in a car valued at $20,000. In this case, the tax amounts to almost half of the $1,500 increase in the value of the car being purchased.
In neighboring states, such as Texas, Kansas, Missouri and Arkansas, the trade-in value of a vehicle reduces the taxable value of the purchase, saving taxpayers money.
For my constituent – a woman on a fixed income who needs reliable transportation to take care of her family’s health care needs – this double-taxation was not an insignificant amount.
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The time is long overdue for Oklahoma lawmakers to fix this problem and put Oklahoma taxpayers first. We should work hard to ensure we are not an outlier in tax policy. In fact, we should be leaders.
Taxes are necessary, but their impact on economic activity must be minimized. Our current tax structure on vehicles discourages people from trading in cars or from buying a more expensive car. A natural repercussion of this would be a shortage of used cars as fewer trade-ins are available.
Moreover, double taxation just isn’t right, and it’s a cycle that hurts all Oklahomans.
Thanks to my constituent, we’re working to fix this problem.
I filed House Bill 2986, which last week passed out of the Oklahoma House of Representatives by a unanimous vote of 92-0. The bill now awaits consideration in the state Senate. This bill will allow taxes on a vehicle purchase to be reduced based on the value of a trade-in.
Because one person saw something wrong and called it to the attention of her state representative, we hopefully can help families across the state while making Oklahoma tax policies more competitive with surrounding states.
This is the epitome of engaging with government to effect positive change not just for oneself, but for many. The institutions of government can seem intimidating, but I’m glad my constituent didn’t let that stop her from reaching out.
HB 2986 is just one bill in a larger package of measures aimed at providing tax relief for the hardworking citizens of our state. In a time when inflation is at a 40-year high, it’s important we do all we can to minimize the tax burden for all Oklahomans.
Rep. Steve Bashore, R-Miami, has represented District 7 since 2020.
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