Montana LLC: What You Need to Know to Tag Your Car in Montana

So, you want to save big on taxes for that sweet motorhome you just bought, but you know that your home state is going to skewer you, right? Montana is a wide-open, free-range piece of heaven, but moving there isn't for everyone. However, their flat 0% vehicle tax rate is for everyone if you know how to navigate it.

If you are a resident of the Golden State, you are locked in for at least 7.5%, minimum, plus up to 2.5% depending on your local municipality. So, for that awesome $400,000 rig, you might be in for $40,000 in taxes. Montana affords a significant reduction in tax burdens, with a luxury tax for RVs and luxury cars valued at over $150,000. The tax rate starts at 1% of the MSRP for the first year and is reduced by 0.1% each year thereafter until it drops to 0% at the eleventh year and beyond.  

Not so fast, bud. In Montana, you must prove residency to register your automobile in the State of Montana. Oops.

Photo by Tony Reid on Unsplash

Don't worry; we at Dirt Legal are aware of this and we have you covered. Montana is known as a hub of exotic car ownership, which is wild considering it is such a rugged state. You would not expect to see so many Lamborghinis and Ferraris there, yet many of these exotics are sporting Montana plates.

So, Why Are There So Many Exotic Cars in Montana?

So, what is it exactly that has made Montana a Mecca of exotic cars? Well, it probably isn't the gathering place of these extreme high-performance machines. It is tough to get an exact count, but it looks like there are somewhere in the ballpark of 800 exotic supercars registered in Montana.

What does the tax impact look like if you register these in California, a state where many of these originate? Well, on a Rolls Royce Phantom, valued at $430,000, the minimum tax owed (7.5% to the state) is $32,250. Of course, if you tack on the maximum local tax of an additional 2.5%, bringing you up to a total of 10%, you will owe $43,000 in tax alone at registration.

But let's set our sights up a little higher, say, at the McLaren P1, a model with around twenty registered in Montana. Now, these little guys start at about $1.2 million and go up from there. The minimum tax due on a P1 will run you $90,000, and at 10%, you will be in for $120,000 in tax.

So yes, the reason why you are going to see these supercars often sporting a Montana plate is that nobody, including the super-rich, wants to kick in over a hundred grand in tax alone.  

What Are the Benefits of a Montana LLC?

It is not so much that there is a benefit to owning a Montana LLC as it is necessary. There is no other way to prove any legal residency in the state besides actually owning property there. But, of course, an LLC goes a lot farther than providing proof of ownership; it is a method of protecting your personal property. And people have long used these as tax shields. A great example, the classic Delaware LLC. For decades, airplane owners have used Delaware LLCs who routinely operate their planes under an LLC rather than their name. The Delaware LLC is popular because there is no annual report, but instead only is ordered to pay $300 in tax per year, rather than it being based on the value of the aircraft, which can easily run $300,000-$2 million for private airplanes. Why go in-depth on Delaware? Because the principle is the same: airplane owners do not have to register their airplanes in their state as a car, so the state sees it as a property asset to be taxed. However, cars must be licensed and registered in a specific state. Thus, the LLC provides you a "home" for your asset to legally reside, even though it may physically reside elsewhere.

How Can I License a Car in Montana LLC on My Own?

 There are a lot of the ins and outs in navigating the registration process from state to state. Also, we already know the buttons to push and levers to pull to get this done promptly. We understand that time and frustration are premiums. chances are that if you have the resources to purchase your car, you do not have an abundance of free time to spend learning the intricacies of Montana LLC law and registration processes. We do. It's what we do.

Do I Need to File A Tax Return for the LLC?

In the case of protecting your assets, no, you do not need to file a tax return for your Montana LLC. The reason for this is in the details of what type of LLC is filed. In this case, it is an asset-holding LLC.

Asset holding companies are routinely used by large companies who are sheltering their considerable assets in real estate and equipment in a company separate from their leading corporation. Essentially, their large operation is an interconnected web of small companies that vary in composition depending on the purpose of each section.

This is quite different from a revenue-generating LLC, which is not necessarily in existence to hold onto any assets at all. The Montana LLC keeping your car serves the purpose of a legal state residency.

The Tax Code in Montana

So, let's take a minute or two to look at how the tax code in Montana works out, at least regarding your prospective LLC. First and foremost, this is not a definitive guide; if you are looking for specifics, you need to speak to a tax attorney to get legal advice and speak to your exact situation.

Your tax concerns will be limited regarding your LLC because it will be asset holding only. So as long as you do not go off and do any income generation with your vehicle registered under your LLC, you should be just fine regarding this. But again, we are not here to offer legal advice, so if you have concerns make sure to talk to one of our trusted agents first to put you on the right path.

What About Annual Registration?

This certainly sounds like a lot to wrap your mind around, but it's alright because this is what we do. So, once the car is titled, tagged, and registered initially, what does the renewal process look like for your Montana-tagged car?

Montana is one of the most accessible states because they have a provision that allows all vehicles eleven years and older to be tagged permanently. That's right; you never have to pay your annual registration fees ever again. So let's say you are holding onto a classic Porsche 911, and you register it in Montana. Well, once you have gone through the initial process, you are good for life!

But hold on, not so fast yet there, Mario Andretti. You registered your supercar(s) under an LLC, remember? Well, that is not exactly a dealbreaker. All you need to do is make sure you pay your $150 annually to keep that LLC up and running. The jig is up if you fail to keep your LLC active, though, as you will no longer be able to register your car in Montana, or at least not in the capacity that you had. So you would have to go back through the process and reestablish an LLC and start over again. So, in short, make sure you pay the nominal annual fee.

Are There Special Rules for Motorcycles in Montana?

No, there are not any special rules for motorcycles in Montana, i.e., anything that is altogether above and beyond other states. What Montana does do, though, is differentiate whether your vehicle will be street-legal or off-highway.

You still have to register if you use your dirt bike or quadricycle off-road on public land. BUT…you only have to register motorcycles in Montana one time, and it is good for the vehicle's lifetime.

Temporary Resident Rules

One interesting aside in Montana is that temporary residents, while they do have to register their motorcycle in the state even though it is a temporary nature (author's note: is anyone checking this if you are a seasonal worker?), you do not need to register it permanently. It can be broken down per quarter. I do not know why this matters, and since Montana is a one-time registration state for motorcycles, it seems like the more prudent thing to do is make it long-term with a permanent Montana LLC, especially if you are tagging your UTV. I especially believe this, considering the temporary registration fee is the same as the permanent registration fee, so why would you do the interim in the world? Even free states are mired in senseless bureaucracy.

Can I Add More than One Vehicle to My LLC?   

If you are reading this, then chances are it is because you are a car collector, which is terrific! You are our people. You probably want to know whether you can put more than one asset under your Montana LLC, which makes a lot of sense: this is an asset-holding LLC, so why should it not contain multiple assets?

The answer is yes! You absolutely can add multiple assets to your Montana LLC. Our fee to make the happen seamlessly is only $700 for each additional asset.

Can I Mix and Match Assets? Of Course!

Collectors collect. We cannot imagine that supercar and classic car collectors would not also be interested in traveling the nation in a high-dollar motorhome or fifth wheel. So you should tuck your RV into your Montana LLC and shelter it from excessive tax burdens. And why are you at it while not legalize that UTV in your shop and put it under the Montana LLC? Kill two birds with one stone: you now have a street-legal UTV, and it is protected from excessive taxation.

What Types of Vehicles can be Registered in Montana?

The State of Montana has always been a free state, full of wide-open spaces. Their love for freedom on the open road became mainstream when the state removed the speed limit on interstates back in 1995, instead making it “reasonable and prudent”. They also have long adhered to the practice of tagging ATVs and dirt bikes for road-legal use. Since UTVs have risen dramatically in popularity over recent years, they have been added to the list of vehicles that can be licensed for public road use. However, if you choose to go this route from out of state, you will need to establish residency which is part of our UTV registration package. We take do the legwork so that you can focus on more important things, like riding your UTV.

According to Montana Statute 61-3-301, low speed electric vehicles or golf carts can be operated on public roads with a special license plate, and a low-speed restricted driver’s license[JM2] .

But do keep in mind that Montana has two separate requirements: ALL off-highway vehicles (OHVs) have to be registered if they are going to be ridden on public land, which is a one-time, permanent registration. But this does not make them street legal. To be a street legal vehicle, they must meet standard DOT specifications for horns, lights, mufflers and spark arresters, etc., and they also must have a license plate. So, an OHV, whether it be an ATV, UTV, or dirt bike, can operate on public land if it is registered and licensed, but an OHV that is registered but does not have a license plate cannot operate on public roads.

In Summary

Montana has long been a pioneering state for drivers and owners. They have street-legalized ATVs and UTVs for many years, and they were the first state to dabble in removing speed limits. They also offer financial freedom from oppressive taxation in the form of 0% sales tax, which has made them appealing to out-of-state owners. However, you need to prove residence in the State of Montana, but an LLC will suffice. This is where Dirt Legal steps in. We have made inroads in the state to provide you the proof of residence through LLC that you need, and we do the rest of the service for you as well! So, what are you waiting for? Your state will not cut you a break, so create your break and get started right now!