drive by Dallas, Houston or Austin It no longer only means coming across giant trucks and impossible sports cars. The curious thing appears when many of those Ferrari, Rolls-Royce or Lamborghini They have license plates Mountaina state located hundreds of kilometers away and with a completely different reality than Texas.
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The scene repeats itself more and more and there is nothing coincidental about it. Behind those plates is a strategy that mixes tax advantages, legal loopholes and a lot of money at stake. For several luxury vehicle owners, registering the car outside of Texas became a way to avoid sky-high taxes while still driving daily on the state’s roads.
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The practice grew especially among owners of supercars, motorhomes and premium SUVs who seek to reduce expenses without giving up vehicles valued at astronomical figures.
The savings can be huge
Texas imposes a state tax of 6.25% on the purchase of vehicles. In ordinary cars it may seem manageable, but when the price exceeds $300,000 dollarsthe bill changes completely.
In a sports car of that value, the savings can easily exceed the $18,750 dollars in taxes alone. And when it comes to private collections or exclusive hypercars, the difference can skyrocket into six figures.
That’s where Montana comes into the picture. That state does not charge vehicle sales tax and also allows cars to be registered through LLC companies even if the owner does not live there.
How the system works
The maneuver is usually done through specialized companies that create an LLC in Montana for about $1,000 dollars. Afterwards, the vehicle is legally registered in the name of that company and not directly to the proper owner.
Attorney Ronald Lipman, specialist in this type of operations in Houstonassures that a large part of these vehicles never set foot in Montana and actually belong to Texan residents.
In addition to the tax benefit, many owners find other interesting advantages. Montana does not require strict roadworthiness inspections or emissions controls like other states. It also offers cheaper annual registrations and an extra level of privacy over the identity of the vehicle owner.
Montana has more cars than drivers
The growth of this practice is already beginning to be reflected in official statistics. Data from the Federal Highway Administration shows that Montana registered more than 2.3 million vehicles in 2023, despite having just 879,000 licensed drivers.
That makes the state the national leader in the number of vehicles per driver, a figure that far exceeds the average for USA.
Within the world of exotic cars, Montana even gained fame as a kind of automotive tax haven. At collectors’ meetings and specialized forums, the topic constantly appears among those seeking to reduce costs.
Texas tightens controls
Although the strategy may fit within certain legal margins, tax authorities have already begun to pay much more attention.
Texas reminds that residents must pay taxes if the vehicle is used primarily within the state, regardless of where it was registered. If authorities detect irregularities, they can claim late payments, fines and accrued interest.
California was even more aggressive and began using automatic license plate readers, cross-databases, and vehicle permanence tracking to detect potential tax evasion.
For this reason, specialists recommend analyzing each case with legal and tax advisors before attempting an operation of this type.
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