How Much Is Back Tax On A Car In Hawaii?

Buying a used car in Hawaii can come with surprise taxes and fees if you don’t do your research ahead of time. One key tax to be aware of is the back tax, which refers to any unpaid registration and weight taxes from previous owners.

If you’re short on time, here’s the quick answer: Back taxes on a used car in Hawaii typically range from $20 to a few hundred dollars depending on the car’s value and how long taxes were not paid. But it pays to check a car’s back tax status before buying.

In this comprehensive guide, we’ll cover everything you need to know about Hawaii’s back tax on cars, including how it’s calculated, average costs, how to check a car’s status, and tips for avoiding surprises.

What is Hawaii’s Back Tax on Cars?

Definition of back tax

The back tax on cars in Hawaii refers to the general excise tax that must be paid when registering a used car that was not previously registered in the state.

The general excise tax (GET) is essentially a sales tax that applies to business activities in Hawaii, including the sale of vehicles.

So when registering a used car from out of state, you must pay the GET that would have applied when the car was first sold in Hawaii.

What triggers it?

The back tax is triggered when registering any used car in Hawaii that was not previously registered in the state. So if you bought a used car in another state, or purchased one privately from a Hawaii resident who did not pay the general excise tax initially, the back tax would apply.

For example:

• You purchased a used car while living in California and later moved to Hawaii. The back tax would apply when registering your car in Hawaii.
• You bought a used car from a private party seller in Hawaii who did not pay the GET tax originally. The back tax would need to be paid upon registering the car.

How it’s calculated

The back tax is calculated as 4.5% of the vehicle’s base value, which includes the sales price plus any shipping or transportation costs. According to Hawaii’s Department of Taxation:

So in this example, with a $5,500 base value for the used car, the back tax due would be $247.50. The general excise tax rate on vehicles in Hawaii remains 4.5% whether registered on Oahu or on a neighbor island.

To estimate the back tax for a used car, you would multiply the vehicle’s value by 0.045. And be sure to factor in shipping/transport fees in addition to the sales price. Paying this tax allows you to legally register and drive the car in Hawaii.

How Much Does it Typically Cost?

Back taxes by vehicle value

The amount of back taxes owed on a vehicle in Hawaii can vary greatly depending on the value of the vehicle. Here are some general guidelines:

• For lower-value vehicles under $5,000, back taxes typically range from $100-500.
• For mid-range vehicles from $5,000 to $20,000, back taxes typically range from $500 to $2,000.
• For higher-end luxury vehicles over $20,000, back taxes can exceed $2,000+.

As you can see, the higher the vehicle’s value, the more back taxes are typically owed. This is because Hawaii’s annual vehicle registration and weight taxes are based on the car’s value. Failing to properly register a vehicle for multiple years can really add up!

Also read: How To Register A Car In Hawaii: A Detailed Guide

Other factors that increase/decrease costs

While vehicle value is the primary determinant of back tax costs in Hawaii, some other key factors can also impact the final bill including:

• Length of non-compliance: More lapsed registration years equals higher back taxes.
• Interest and penalties: The state tacks on fees for late payment which builds over time.
• Vehicle weight: Heavier cars and trucks have higher registration fees.
• County: Registration rules and rates vary slightly by Hawaii’s counties.

Luckily there are some cases where back tax bills might be reduced. For example, if a vehicle was stored long-term and not driven on roads. Or if you can prove financial hardship. Checking with the Hawaii DMV on the specifics of your situation is wise.

Checking a Car’s Back Tax Status

Getting a title search

Conducting a title search is the best way to check if a used car has any back taxes owed in Hawaii. You can request a title search from the DMV to see if there are any outstanding taxes or fees on the vehicle (source).

This will provide a full history of the car’s registration and any tax liabilities associated with it. If the results show back taxes owed, you can use that information to negotiate the price or walk away from the sale if the amount is too high.

Using online databases to check

There are also some online databases that provide information on a vehicle’s title status and back taxes, such as AutoCheck. You can input the VIN number to access reports on the car’s history. However, these services usually charge a fee.

The level of detail may also vary, so a DMV title search is usually more comprehensive.

Calling the DMV for information

You can call the Hawaii DMV at (808) 532-4324 and provide the license plate or VIN to inquire if there are any overdue registration fees or taxes on the used vehicle (eHawaii.gov). The agent can access the records and let you know if back taxes are owed.

This takes the guesswork out of checking on your own. Just be aware that wait times to speak with an agent may be long.

Tips for Avoiding Surprise Back Taxes

Buy from a dealer

Purchasing a used car from a licensed dealer is one of the best ways to avoid surprise back taxes. Dealers have an incentive to make sure title and registration paperwork is in order before selling a car. They also typically handle submitting paperwork and fees to the DMV on the buyer’s behalf.

This helps ensure taxes are paid properly at the time of sale.

On the other hand, private party sales come with more risk of undiscovered problems. The seller may not be fully aware of back taxes owed or may fail to disclose them. Doing due diligence by carefully reviewing paperwork and registration history can help uncover any past-due tax issues.

Review title and registration paperwork

Before finalizing any used car purchase, thoroughly review all title and registration documentation. Check that the title is in the seller’s name and be sure to note the issue and expiration dates. Cross-reference vehicle identification numbers on title paperwork to the car itself.

Also verify registration is current. Expired or lapsed registration can be a red flag for unpaid taxes. Use your state’s DMV website to look up the license plate for any back fees owed. Document everything to protect your own liability after purchase.

Factor tax into negotiation

If you discover back taxes are owed on a used car, don’t immediately walk away. Instead, factor it into purchase negotiation. The seller may agree to a lower price to offset taxes you’ll now need to pay or reimburse you directly.

For example, if $500 is owed for past registration fees, offer $500 less for the car itself. Get any negotiation in writing, such as “Seller agrees to reimburse buyer $500 towards taxes due on vehicle at time of sale.” This protects you legally and financially.

Also read: Are Cars More Expensive In Hawaii?

What If I Unknowingly Bought a Car with Back Taxes?

Buying a used car can be tricky, as there may be hidden issues like back taxes that the buyer is unaware of. If you unfortunately buy a car with unpaid back taxes, here is what you need to know:

You Are Responsible for the Taxes

Even if you were unaware of the back taxes when you bought the car, you are now responsible for paying them. The state views you as the new owner, so those fees are now on you.

The Fees Can Be Substantial

Back taxes on a car in Hawaii can add up fast. You may owe back registration fees, weight taxes, rental vehicle surcharge taxes, tour vehicle surcharge taxes and more.

Plus, penalties and interest accrue the longer the taxes go unpaid. This can result in hundreds or even thousands of dollars owed.

Act Quickly to Resolve It

As soon as you find out a car you bought has back taxes owed, act fast. Contact the seller and discuss the situation. Check Hawaii’s Department of Motor Vehicles website to find out exactly what is owed. Then make a plan to pay off the taxes ASAP to avoid further penalties.

You May Be Able to Sue the Seller

If the seller did not disclose unpaid taxes when selling you the car, you may have legal recourse. Consult with a Hawaii consumer protection attorney to see if you can sue the seller for compensation.

This especially applies if you have written records showing the seller stated all taxes were paid up.

Prevent This in the Future

Going forward, be very thorough when buying a used vehicle. Run a DMV record search before purchase to uncover any unpaid taxes.

Ask for documentation the seller has paid all fees. And if possible, meet at a DMV office to verify together no back taxes are owed.

Being diligent can help avoid landing in this tricky situation again.

Also read: How To Sell A Car In Hawaii: A Detailed Guide

Conclusion

Finding out a used car you just bought has hundreds in unpaid back taxes can quickly put a damper on your new purchase. But by learning Hawaii’s tax laws upfront, getting a title search, and confirming a clean record, you can avoid any bad surprises and confidently enjoy your new set of wheels.

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