NEWS & INSIGHTS
Out-of-State Vehicle Sales: What Florida Auto Dealers Need to Know in 2026
Selling vehicles to out-of-state customers can create unexpected sales tax exposure for Florida dealerships. Florida’s 2026 Motor Vehicle Sales Tax Rates by State publication provides updated guidance on nonresident vehicle sales, partial exemptions, Form DR-123 requirements, and state-specific tax rates. Understanding these rules can help dealers avoid assessments, penalties, and customer disputes.
Florida’s Baseline Rule for Motor Vehicle Sales
When a motor vehicle is sold in Florida, Florida’s state sales tax generally applies, currently set at 6 percent. This baseline rule does not change simply because the purchaser lives in another state. The Florida Department of Revenue reaffirmed this framework in Tax Information Publication 26A01-01, issued February 11, 2026, which updates the state-by-state rate chart used to calculate tax owed by nonresident purchasers and walks through the mechanics of Florida’s partial exemption.
For Florida dealers, SALT practitioners, and CPAs advising clients on multistate vehicle purchases, this TIP is a useful checkpoint for confirming that internal procedures still match current Department guidance, particularly around Form DR-123 and the 45-day licensing requirement.
The Partial Exemption Explained
Florida law provides a partial sales tax exemption for new or used motor vehicles sold in Florida to residents of another state. Under this exemption, Florida collects sales tax from the nonresident purchaser at a rate equal to what the purchaser’s home state would have charged had the vehicle been purchased there instead.
The practical effect depends entirely on the home state’s rate. If the home state’s sales tax rate is below 6 percent, the purchaser may claim the partial exemption and pay Florida tax at the lower, home-state rate. If the home state’s rate is 6 percent or higher, Florida collects its full 6 percent rate regardless of the exemption claim. The TIP’s two worked examples illustrate this clearly using a hypothetical 50,000 dollar vehicle with a 17,000 dollar trade-in allowance: an Alabama resident, whose home state taxes vehicles at 2 percent, pays only 660 dollars in Florida tax when Form DR-123 is properly completed, while a Tennessee resident, whose home state rate is 7 percent, pays the full 1,980 dollars in Florida tax either way, because Tennessee’s rate already exceeds Florida’s.
Completing Form DR-123 and the 45-Day Window
To claim the partial exemption, the nonresident purchaser must complete an Affidavit for Partial Exemption of Motor Vehicle Sold to a Resident of Another State, Form DR-123, at the time of sale. The affidavit must declare the purchaser’s intent to license the vehicle in their home state within 45 days of the purchase date. The completed form goes to the selling dealer, or, if the vehicle is purchased from a private individual, to the county tax collector or a private tag agent when applying for a temporary tag.
Timing matters here. If Form DR-123 is not completed at the time of sale, the purchaser loses the ability to claim the partial exemption, and Florida’s full 6 percent rate applies, as shown in the TIP’s Alabama example. If the purchaser does license the vehicle in their home state within the 45-day window, Florida does not require the vehicle to be physically removed from the state during that period.Â
Corporate and Partnership Purchasers
The partial exemption does not extend to a nonresident corporation or partnership if a corporate officer is a Florida resident, a stockholder owning at least 10 percent of the corporation is a Florida resident, or a partner owning at least 10 percent of the partnership is a Florida resident. This carve-out exists to prevent Florida residents from using an out-of-state entity to access a lower out-of-state tax rate on a vehicle that will, in practice, remain associated with Florida ownership interests.
There is, however, a path back to the exemption for these entities: if the vehicle is removed from Florida within 45 days of purchase and stays outside the state for a minimum of 180 days, the partial exemption may still apply, regardless of the residency of the entity’s owners or stockholders.
Vehicles Brought Into Florida From Other States
The TIP also addresses the reverse scenario, where a vehicle is purchased outside Florida and later titled, registered, or licensed in the state. These vehicles are generally subject to Florida’s 6 percent use tax, plus any applicable discretionary sales surtax imposed locally.
An important presumption applies to vehicles used outside Florida for six months or longer before being brought into the state: they are presumed to have been purchased for use outside Florida, and once the owner documents that out-of-state use, no Florida use tax is due at all.
Florida also allows a credit against its use tax and any discretionary surtax when a like tax has already been lawfully paid to another state, the District of Columbia, or a U.S. territory, including county or city-level taxes within that state. If the tax already paid equals or exceeds the Florida amount, no further Florida tax is owed. If it is less, only the shortfall is due.
A Reminder on Home-State Treatment
Practitioners should flag for clients that paying Florida sales tax does not automatically guarantee a credit at home. The TIP specifically identifies Arkansas, Mississippi, and West Virginia as states that do not allow a credit for sales tax already paid to Florida, meaning a purchaser there could face tax in both states on the same transaction. Nonresident purchasers should confirm credit treatment directly with their home state’s taxing authority before assuming Florida tax paid will offset what is owed at home.
Why This TIP Matters for SALT Practitioners
TIP 26A01-01 does not change the underlying statutory framework found in sections 212.06(7), 212.06(8)(a), and 212.08(10), Florida Statutes, but it does update the rate chart dealers and practitioners rely on to calculate exemption amounts correctly at the point of sale. For firms advising dealerships, high-net-worth buyers relocating to or from Florida, or businesses with multistate vehicle fleets, confirming current rates against this chart before closing a transaction remains the safest way to avoid both Florida assessment exposure and unexpected home-state liabilities.
Florida's state sales tax rate is 6 percent, but a nonresident buyer may qualify for a partial exemption that lowers this rate to match their home state's rate, if that rate is below 6 percent.
Form DR-123 is the Affidavit for Partial Exemption of Motor Vehicle Sold to a Resident of Another State. It must be completed at the time of sale for a nonresident buyer to claim the lower, home-state tax rate instead of Florida's full 6 percent.
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The purchaser has 45 days from the date of purchase to license the vehicle in their home state to satisfy the partial exemption requirement under Form DR-123.
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No. As long as the vehicle is licensed in the purchaser's home state within 45 days, Florida does not require the vehicle to be physically removed from the state during that period.
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If Form DR-123 is not completed at the time of sale, the purchaser cannot claim the partial exemption, and Florida's full 6 percent state sales tax applies to the transaction.
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Generally no, if a Florida resident is an officer, a 10 percent or greater stockholder, or a 10 percent or greater partner. The exemption can still apply if the vehicle leaves Florida within 45 days and stays out of state for at least 180 days.
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According to TIP 26A01-01, Arkansas, Mississippi, and West Virginia do not allow a credit for sales tax paid to Florida, which can result in tax being owed in both states.
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If the vehicle was used outside Florida for six months or longer before being registered in Florida, and the owner can document that use, no Florida use tax is due.
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The exemption and related rules are governed by sections 212.06(7), 212.06(8)(a), and 212.08(10) of the Florida Statutes, as summarized in TIP 26A01-01.
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No. It is not law and remains subject to litigation and voter approval.
Florida State and Local Tax Litigation
Explore our Florida State and Local Tax Litigation. Businesses facing Florida tax disputes should be prepared for the possibility that litigation may continue beyond the trial level. Understanding how tax cases move through Florida’s appellate courts can be critical to protecting favorable rulings and challenging adverse decisions.
© 2025 Jeanette Moffa. All rights reserved.
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Jeanette Moffa, Esq.
(954) 800-4138
JeanetteMoffa@MoffaTaxLaw.com
Jeanette Moffa is a Partner in the Fort Lauderdale office of Moffa, Sutton, & Donnini. She focuses her practice in Florida state and local tax. Jeanette provides SALT planning and consulting as part of her practice, addressing issues such as nexus and taxability, including exemptions, inclusions, and exclusions of transactions from the tax base. In addition, she handles tax controversy, working with state and local agencies in resolution of assessment and refund cases. She also litigates state and local tax and administrative law issues.