Excise Tax
What excise taxes are, the federal ones built into what you buy, how the Massachusetts motor vehicle excise is figured, and a calculator.
Excise tax calculator
What an excise tax is
An excise tax is charged on a specific product or activity rather than on income or general sales: fuel, airline tickets, tobacco, alcohol, a car's registration, or a company buying back its own stock. Many are built into the price, so you pay them without seeing a separate line.
Federal excise taxes you pay
- Gasoline: 18.4¢ a gallon; diesel: 24.4¢ a gallon (IRS Publication 510).
- Domestic air travel: 7.5% of the fare, plus per-segment fees.
- Corporate stock buybacks: a 1% excise tax, reported on Form 7208.
- Businesses report most federal excise taxes quarterly on Form 720.
Massachusetts motor vehicle excise
Massachusetts charges $25 per $1,000 of your car's value each calendar year, billed by the city or town where it's garaged. The value is a set percentage of the manufacturer's list price, not what you paid:
| Year | % of list price |
|---|---|
| Year before the model year | 50% |
| Model year | 90% |
| Second year | 60% |
| Third year | 40% |
| Fourth year | 25% |
| Fifth year and older | 10% |
Example: a $40,000 list-price car in its model year: $36,000 × $25 ÷ $1,000 = $900; by the fifth year it's $100. Other states tax cars by value as personal property tax.
Common questions
What is an excise tax?
A tax on a specific good or activity, such as fuel, air travel or vehicles.
How is the Massachusetts car excise calculated?
$25 per $1,000 of value, where value is a set percentage of the manufacturer's list price.
What is the federal gas tax?
18.4 cents a gallon; diesel is 24.4 cents.
Sources
- Mass.gov: Motor vehicle excise
- IRS Publication 510, Excise taxes
- IRS: About Form 7208
- IRS: About Form 720
More paycheck and tax calculators: Earned Income Tax Credit · Enrolled Agent (EA) · FBAR Filing · FEDVIP
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General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.