Switzerland is probably the first place that comes to mind when you think of mountainous tax havens. However, Montana is also an appealing place for the wealthy to purchase and register exotic cars in the United States, despite being home to the most Pontiac owners in the nation. The Treasure State doesn’t levy a state sales tax or conduct vehicle inspections or emissions tests. While Montana does enforce a residency requirement, the cost to skirt it is minimal compared to the tax bill. It’s a convenient way to own several hypercars and potentially save hundreds of thousands of dollars in taxes.
First, let’s discuss the taxes that people are trying to dodge. All but five states in the union charge sales tax on products and services. The rates vary from state to state. California imposes a 7.5% sales tax. Texas, despite not having a tax on personal income, levies a 6.5% sales tax. You probably don’t bat an eyelid at the added cost during a trip to the mall or hitting the order button for an online purchase, but the wealthy can be shocked by how percentages work. To play out a hypothetical, you’re a C-suite executive for a national telecommunications company in Dallas in the market for an Aston Martin Valkyrie. The British hybrid hypercar starts at $3.5 million, so the Texas tax bill starts at $218,750.
Corporations are people and can choose to live in Montana
You, our thrifty executive, would then find your way to a specialty service based in Montana to register your hypercar there. The service will form a Montana LLC to legally own the vehicle as a workaround for the residency requirement. The total cost would be roughly $1,825 when you factor in Montana’s $825 luxury tax. It might not be free, but it’s a steal compared to what would have been paid to the state government of Texas.
If you’re now interested in Montana LLCs, you should be warned that the states losing out on tax revenue aren’t taking this lightly. The California Department of Motor Vehicles is using license plate readers to catch tax evaders red-handed. State law there mandates that California residents must pay sales tax on a vehicle if it enters the Golden State within 12 months of their purchase. The DMV states that California dealers sold 10,000 cars with a combined value of $2 billion to Montana LLCs since 2022. The agency’s investigations have collected $1.6 million in back taxes, registration fees and fines so far. If the wealthy are going to drive expensive cars on our roads, they should at least pay their fair share to pave the streets.
