SALEM, Oregon — The Oregon Supreme Court ruled that the distribution of the vehicle privilege tax is constitutional. This determination comes in response to an appeal challenging that distributing revenues from a tax on vehicles to any fund other than the State Highway Fund goes against the Oregon Constitution.
There will be no changes to the privilege tax or its companion tax on out-of-state vehicle purchases, the vehicle use tax. This means that dealers are still responsible for paying the one-half of 1 percent tax on the sale of new vehicles for the privilege of selling vehicles in Oregon. It also means that those who purchase new vehicles outside of Oregon for use in the state must still pay the same tax rate before they can register their vehicles in Oregon.
The first $12 million in vehicle privilege tax revenues—after reimbursement of administrative costs—go to the Zero-Emission Incentive Fund through 2024. The remainder goes to the Connect Oregon Fund. Starting in 2024, revenues will go solely to the Connect Oregon Fund. Revenues from the vehicle use tax go to the State Highway Fund.