Your Mississippi car tag was far lower in price this year. Here’s why.
Mississippi’s car owners were left with a little money in their pockets thanks to an increase in a tax credit for state motor vehicle tags.
Some drivers reported saving hundreds of dollars when getting a new car tag compared to their previous vehicles. Others also saw far lower prices when renewing their tag at their county’s tax assessor office.
This year’s cheaper car tag fees are signs of Mississippi’s return to normalcy after the 2020 quarantine.
The annual fees you pay for car tags are considered a form of property tax The taxes haven’t changed, but an annual tax credit fluctuated from 6.5% of the assessed value of the vehicle in 2021 to 8.75% in 2022.
“A portion of the taxes the state receives for car sales goes into a fund called the Motor Vehicle Ad Valorem Tax Reduction Fund,” said State Senator Scott DeLano. “The taxes collected on car sales the prior year determine the current car tag credit.”
In 1994, the state legislature passed a bill giving motor vehicle owners a credit of 5% of the assessed value of their vehicle. While it helped owners, it hurt local governments that depended on those fees.
Legislators created the tax reduction fund to make up for the funds the government lost each year to the motor vehicle owner discount. Each month, the funds are used to reimburse each county.
The credit percentage rate is determined each year by estimating the local governments’ tax loss, tax revenue and the balance left in the fund. Because there were relatively no sales during 2020’s quarantine, the funds were depleted and the annual percentage of the 2021 credit dropped to 6.5%.
This year’s lower fees reflect the return of automobile sales in 2021, which increased tax revenue and replenished the tax reduction fund.
This story was originally published December 13, 2022 at 4:29 PM.
