What credit did Texas allow when vehicles or equipment leased outside Texas were brought into the state?

Plain-English summary

The Texas Tax Correspondence Division said vehicles purchased or leased outside Texas and brought into the state for highway use incurred historical motor vehicle use tax. The owner or lessee received credit for tax legally paid to another state on the same vehicle.

The letter separately said a motor vehicle rented outside Texas was not subject to Texas gross rental receipts tax and used a period shorter than 180 days to define a rental.

Other tangible personal property leased outside Texas and brought into Texas for storage, use, or consumption incurred use tax, absent contrary evidence, with credit for similar tax legally paid to another state.

What this means for you

Keep proof of tax legally paid elsewhere, but verify current rates, credit requirements, residency rules, and vehicle-versus-equipment treatment.

Common questions

Q: Was another state's tax credited?

A: Yes, when legally paid on the same vehicle or as a similar tax on the equipment.

Q: Did the letter impose Texas rental receipts tax on a vehicle rented outside Texas?

A: No.

Citations and references

• Texas Tax Code § 151.101 — cited for use tax on tangible personal property other than motor vehicles.
• Rules 3.68, 3.70, 3.71, 3.78, and 3.294 — cited for military personnel, out-of-state vehicles, new residents, rentals, and equipment leases.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/9008L1038A08

Original ruling text

ALERT: The tax rates (including the New Resident rate) cited in this article are no longer the current motor vehicle sales tax or motor vehicle rental tax rates.

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller August 20, 1990

Dear **:

Thank you for your recent letter regarding sales, use, and/or
rental tax in Texas.

You stated that CORP ABC is a vehicle and equipment leasing
company with locations in five southeast states.

You specifically asked if your customer(s) can offset any
Texas tax that may be due, by tax paid to another state.

Motor vehicle use tax is due on vehicles purchased/leased out-
side Texas and brought into this state for use on the highways.
Credit is allowed to the owner/lessee for tax legally paid to
another state on the same vehicle. Motor vehicle sales/use tax
is 6% of the purchase price. If the owner qualifies as a new
resident, only the $15 new resident tax will be due. Military
personnel's residence is determined by their "home of record".
See Rules 3.70 on vehicles purchased/leased outside Texas, 3.68
on military personnel, and 3.71 on definition of new resident.

A motor vehicle rented outside of Texas is not subject to the
Texas motor vehicle gross rental receipts tax. A rental is de-
fined as a period of time less than 180 days. See Rule 3.78 on
motor vehicle rentals.

Tangible personal property (other than motor vehicles) leased
outside Texas, and subsequently brought into this state for
storage, use, or other consumption is subject to use tax (absent
evidence to the contrary). See section 151.101 of the Texas
Tax Code. Credit will be allowed for a similar tax legally paid
to another state. See Rule 3.294 on rentals and leases.

This opinion is based on the facts presented. If there are ad-
ditional or different facts, the opinion may change.

If you have any questions or need additional information, you
may call me toll free at 1-800-252-5555 extension 5-0330. The
regular number is 512/463-4600, or write me at Tax Correspon-
dence.

Sincerely,
Bettie U. Peterson
Tax Correspondence Division