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Boat and Boat Motor Taxes

December 2013

Boats and boat motors are subject to one of two Texas sales taxes: the boat and boat motor sales and use tax or the limited sales and use tax.

Boat and Boat Motor Sales and Use Tax

The retail sale of a boat with a length of 65 feet or less (measured from the tip of the bow in a straight line to the stern) is subject to the 6.25 percent boat and boat motor sales and use tax, unless an exemption applies.

The tax applies to sailboats, inboards, outboards, jet skis and other personal watercraft, and is computed on the sales price less any trade-in allowance.

The tax is also levied on the retail sale of outboard motors (gasoline or diesel), but not the retail sale of electric motors (such as trolling motors), unless attached to a boat subject to boat tax and sold with that boat for a single price.

A Texas resident who buys a boat or boat motor in another state, and then brings it into Texas for use here, owes use tax. The use tax rate is 6.25 percent, the same as the sales tax, with credit given for any sales or use tax legally paid to another state.

A new Texas resident who brings a boat or boat motor into Texas qualifies for a special $15 use tax instead of the 6.25 percent use tax.

The buyer pays the tax to the Texas Parks and Wildlife Department or to the county tax assessor-collector when titling and registering the boat in Texas.

A boat trailer is subject to 6.25 percent motor vehicle sales or use tax, due when the trailer is titled and registered with the county tax assessor-collector.

Boat and Boat Motor Tax Exemptions

The sale of boats and boat motors to volunteer fire departments, the federal government, Texas state agencies, Texas cities, Texas counties and other political subdivisions in Texas are exempt.

For more information, see Boat and Boat Motor Sales Tax Rule 3.741, Imposition and Collection of Tax and Motor Vehicle Sales Tax Rule 3.72, Trailers, Farm Machines, and Timber Machines.

Limited Sales and Use Tax

The limited sales and use tax applies to boats greater than 65 feet in length (measured from the tip of the bow in a straight line to the stern), canoes, kayaks, inflatable boats and rafts, punts and boats designed to be propelled only by a paddle or pole.

The state limited sales and use tax rate is 6.25 percent. Local sales and use tax of up to 2 percent may also be applicable.

Limited sales and use tax also applies to the:

  • rental or lease of boats or boat motors;
  • sale of electric motors and accessories, such as life jackets or ladders, if sold separately from the boat; and
  • repair and remodeling of boats and boat motors, unless an exemption applies.

Limited Sales and Use Tax Exemptions

Limited sales and use tax exemptions include:

  • sales by the builder of a ship of eight or more tons displacement of fresh water and used exclusively and directly in a commercial enterprise;
  • materials, equipment and machinery that become component parts (such as fuel filters, batteries, fire extinguishers, lifestyle, towing gear) of a ship or vessel of eight or more tons displacement and used exclusively and directly in a commercial enterprise (including commercial fishing and taking paying passengers out for pleasure fishing);
  • materials and labor used in repairing, renovating or converting a ship or vessel of eight or more tons displacement and used exclusively and directly in a commercial enterprise;
  • materials and supplies purchased by the owner or operator of a ship or vessel operating exclusively in foreign or interstate coastal commerce, if they become component parts of the vessel or are used in its maintenance and operation; and
  • materials and supplies bought by a person providing stevedoring services for a ship or vessel operating exclusively in foreign or interstate coastal commerce if loaded aboard the vessel and not removed before its departure.

For more information, see State Sales and Use Tax Rule 3.292, Repair, Remodeling, Maintenance, and Restoration of Tangible Personal Property and Rule 3.297, Carriers.

Disclaimer

This publication is intended as a general guide and not as a comprehensive resource on the subjects covered. It is not a substitute for legal advice.

94-170
(12/2013)

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