Use tax is a tax imposed on non-exempt items brought into Georgia. “Use tax” is also a term commonly used to refer to the tax imposed on taxable goods and services that were not taxed at the point of sale.
Tax Imposed on Non-Exempt Items Brought into Georgia
Use tax is imposed upon the first instance of use, consumption, distribution, or storage in Georgia of non-exempt tangible personal property purchased at retail outside of Georgia.
Note: Property brought into Georgia as a result of a change of domicile is generally exempt as long as the property is not brought into Georgia for use in a trade, business, or profession.
Application of the Tax
Used Less Than Six Months Outside Georgia: If the property was used for six months or less outside of Georgia prior to its first use inside Georgia, then use tax is imposed upon the purchase price of the property at the state and local sales tax rate. Citations: O.C.G.A. §§ 48-8-30(c)(1), 48-8-30(e), 48-8-82(a), 48-8-102(b)(1), 48-8-109.3(b), 48-8-110.1(c), 48-8-201(b), 48-8-241(d), 48-8-269(a).
Used More Than Six Months Outside Georgia: Property used longer than six months outside of Georgia prior to its first use inside Georgia is taxed at the state and local sales tax rate on the lesser of the purchase price or the fair market value of the property. Citations: O.C.G.A. §§ 48-8-30(c)(2), 48-8-82(a), 48-8-102(b)(1), 48-8-109.3(b), 48-8-110.1(c), 48-8-201(b), 48-8-241(d), 48-8-269(a).
Local Sales Tax Rates
Generally, the applicable local sales tax rate is the rate imposed in the county where the buyer receives the goods. Citation: O.C.G.A. § 48-8-77.
A taxpayer’s use tax liability will be reduced by like taxes previously paid in another state. Citations: O.C.G.A. §§ 48-8-30(c)(3), 48-8-30(e), 48-8-42(a).
Example Scenario
Example: A contractor buys a bulldozer in another state and pays state sales tax but no local sales tax. The following week, the contractor transports the bulldozer into Georgia and performs a job in Hall County.
The contractor now owes Georgia state use tax on the purchase price of the bulldozer at a rate of 4%.
The Georgia state use tax liability will be reduced by the sales tax previously paid in the other state.
In addition, the contractor owes Hall County use tax on the purchase price of the bulldozer at the Hall County sales tax rate.
Frequently Asked Questions
What is the difference between sales tax and use tax in Georgia?
Sales tax is applied at the point of purchase within Georgia, while use tax applies to taxable items purchased outside the state and brought into Georgia for use, consumption, or storage, when sales tax was not collected.
When is Georgia use tax due on out-of-state purchases?
Use tax is due when non-exempt tangible personal property is first used, stored, or consumed in Georgia. If no sales tax was paid at the time of purchase or only partial tax was paid, use tax must be calculated and paid to Georgia.
How does Georgia determine the value for use tax if an item was used outside the state?
If the item was used for six months or less outside Georgia, use tax is calculated on the purchase price. If used longer than six months, tax is based on the lesser of the purchase price or fair market value.
Do I get credit for taxes paid to another state?
Yes, Georgia allows a credit for like taxes paid to another state, reducing the use tax liability accordingly.
What is the applicable local use tax rate?
The local use tax rate is based on the county where the buyer receives the goods. This rate is combined with the 4% state rate to determine the total use tax owed.
