The Benefits of Registering a California Car Out-of-State

There is an actual departure leaving the Golden State; even the media outlets in California conclude that this is real. Or maybe not so much concluding but admitting the unavoidable. Whatever the case is, people are fleeing this proud state in droves, with more people leaving than are moving in.

The extraordinarily high cost of living is a prime reason for the very real exodus. Nearly every service and commodity in the state are higher than the rest of the nation, and car registration is absolutely no exception.

This article is part of my series on the benefits of registering vehicles out of state. Make sure to check out the whole series!

Dirt Legal is here to give you options for registering your car or truck out of state to save you a bundle of cash and get you out of smog checks. That’s right; no more Googling “smog check near me” when it is time to update your sticker; we will get you on the road with no fuss. 

Framing the Problem in California

So what exactly makes California so offensive to the palate that tens of thousands are walking away from it? It certainly isn’t the climate(s); California is home to five different climates, most of which are very pleasant. It has the second-most general coastline in the Lower 48 states. California’s economy would rank as the fifth-largest country globally, ahead of India! It is the most populous state in the nation, has fantastic natural resources, and has traditionally been a hub of global commerce and manufacturing. 

But much has changed over the past few decades. What was once a blue-collar state that made its mark on the world by producing things then transitioned to the mecca of technological development. While this ushered in unimaginable wealth, it also changed the fabric of the state. 

Over the few years, dozens of high-value corporations have left California for greener pastures. For example, Toyota Motors USA, a company with $27.3 bn in direct investment in the U.S., bailed out of Long Beach to land in Texas in 2014-2015. Likewise, Kubota USA, the farm and industrial equipment manufacturer, made tracks for Texas in 2015. Overall, there has been an exodus of 275,000 jobs, and over $76 bn in capital funds have egressed the state since about 2008, with some 13,000 total companies leaving California. 

I have no sympathy for the State of California, as in the state government itself, but a significant amount to the blue-collar workers who have been left in the lurch for decades. They don’t make enough to live in California anymore, but they are too broke to follow their jobs. 

So, on top of the issue of a depleted job market for the middle-class, housing costs are primarily unaffordable for those same people. According to Zip Recruiter, the average salary for Los Angeles is $68,118, a paltry 2.18% over the national average, whereas the average cost of a house is $915,000, 144% over the national average of $374,900. The overall cost of living in LA is 41.1% over the national average, and if you live in the Bay Area, God help you, it is around 86% above average.  

Let’s Talk About Car Taxes in California

Brace yourself because this is probably going to hurt just a little bit. But then, after that, it will hurt a lot. 

Right off the bat, California will shank you for 7.5 percent. Remember that these are the California car registration taxes assessed upon initial purchase. This does not include the California car registration fees, nor does it include the smog check. 

Also, this is only a flat fixed rate for the state and does not include whatever fees the county and local municipality will pile up on you. You can find a specific cost they intend to coerce from you by plugging in your location information at the California DMV website. If you are going to get fleeced, at least it’s nice to have an accurate figure. 

From my exploratory research using the linked calculator, most counties and cities ended up averaging about ten percent in sales tax for an automobile. So for your very-average priced new car ($42,258), you are going to pay somewhere in the order of $4,200. Ouch. 

But it does not end there. Here is the breakdown of the California fee structure associated with your car or truck registration:

• Standard registration fee: $60

• California Highway Patrol (CHP) fee: $28

• Transportation Improvement Fee (TIF), which is based on your vehicle value:

  • $0-$4,999: $27

  • $5,000-$24,999: $55

  • $25,000-$34,999: $110

  • $35,000-$59,999: $165

  • $60,000 and up: $192

So, for your very-average priced new car, you can go ahead and tack on an additional $253 in assorted California registration fees. Local taxes and fees now total $4453. Add the car’s original price and 7.5% state tax for a grand total of $49,880.35, and suddenly you’re paying 50 grand for a $42,000 car, and that’s a significant difference for most people.

What if a Smog Check Is Needed?

We come to the added dimension that California car registration is well known for the smog check. The California Air Resources Board is the lead agency for the smog check program in the state. So here is the rundown on the smog program for the state.

Another sunny day in LA!

The following cars are exempt from smog testing in California:

• Vehicles 8 years old or newer when paying a Smog Abatement Fee

• Hybrid and electric cars

• Gas cars 1975 and older 

• Diesel cars 1997 and older

• Diesel vehicles weighing over 14,000 lbs

• Natural gas vehicles weighing over 14,000 lbs

• Motorcycles

For vehicles that are eight years old and newer, lucky you! You get out of the mandatory smog check. According to the California DMV:

If your vehicle is less than 4 model years old, you can pay a smog abatement fee instead of getting a smog inspection for the first 8 years that your vehicle is registered.

But, why again do you have to pay a fee for a service they don’t require? Asking for a friend. Also, the exemption of motorcycles seems odd considering their hard-line stance on red sticker bikes.

But here’s the absolute truth of the matter: we see in real-time the average age of cars on the road rising. This summer, the average age of a car on the road is 12.1 years old, up from 11.9 in 2020. With this piece of knowledge, you are most certainly going to be dragged into smog check your car every other year for eternity. So you can go ahead and roll another $30-$60 into your registration and operating costs. Oh, and by the way, if your car happens to smoke, heaven help you from the Cali Karens: the CARB has a series of hotlines set up for people to narc you. You’re welcome.

And If I Fail the Smog Check?

Good news: if you fail the smog check, you get to spend more money. But don’t worry, you are not alone: about ten percent of cars fail. 

What this means for you is that, before you can do anything else, you need to pay that cheddar and fix your whip. Considering the complexity of modern emissions systems, you will probably need to have a shop do it; this isn’t like throwing a set of Cherrybomb glass packs on your ‘85 K-10. 

But don’t worry, you don’t have to get to it immediately: the infinitely reasonable State of California will grant you a generous 60-day temporary operating permit (TOP), for a nominal fee of $50, of course. 

Transferring Titles and Selling Your Car

This part of the smog check process is somewhat painless. So, if you have a car and hold the title, you do not need to undergo a smog check so long as it is 1) four years old or newer or 2) eight years old or newer and you have been paying your smog abatement fee. The buyer will, of course, have to pay the $8 smog transfer fee. 

You will have to provide a passing smog check in selling your car. Oh, and by the way, the valid passing inspection must be within the last 90 days. So, even if you just conducted your biennial smog check five months ago, it is invalid. And guess what? If it mysteriously went from passing to failing, you guessed it; you have to get it fixed and pass the smog check before you can sell it. In California, the land of equality, the onus is entirely on the seller rather than the buyer assuming any cost or risk whatsoever. 

What Are the Benefits of Registering Out of State?

No caption necessary.

We have thoroughly discussed the glaring problems with California and its automobile registration process, which are numerous. However, if you like the view, the beaches, and the pleasant climate, it is understandable why you would not want to leave. There are also some areas of the state that have affordable housing, but the cost of auto registration and fees are primarily unchanged from the far costlier areas of the state. In addition, the smog check requirements linger; even if you live in remote and rural Northern California with practically no population density, you are still liable for all of the exact draconian smog check requirements.

But regardless of which part of the state you may reside in, there is another option to save money on registration and kick the smog check to the curb. You can choose Dirt Legal’s Vehicle Registration Service.

With the Vehicle Registration Service, you will now have a freshly minted South Dakota license plate, registration, and title for your car. All we need is a title, Manufacturer’s Certificate of Origin, or bill of sale (if you are financing your car) to process your request.    

Once we have proof of ownership through one of these means, we handle the rest. What you will receive in this process is an entirely new title from the State of South Dakota, a South Dakota license plate, and South Dakota proof of registration. What you will not receive are exorbitant taxes and fees.

What Are the Advantages of South Dakota Car Registration?

We at Dirt Legal have done extensive homework to bring you the very best out-of-state car registration options. South Dakota has proven to be an accessible state with a reasonable tax structure for its registration process. Also, there are no inspections of any kind in South Dakota. None.

That’s less time invested, less money spent, and more breathing room on your next check.

Cost breakdown

So let’s make a quick comparison on the registration of our generic brand new cars with a completely average sale price of $42,258. Our Mr. Average lives in Long Beach. 

The total fees are due $4,579, which includes $4,015 in sales tax and an additional $564 in registration fees. If you are interested in seeing all of the ways that you are getting fleeced in this one-sided transaction, feel free to read through the complete breakdown of the DMV calculator.

You can see these figures and determine that they are, in fact, insane. Now let’s have a look at South Dakota.   

The same $42,258 sale price will calculate at four percent to $1,690.32 in sales tax, an immediate savings of $2,324.68, equating to nearly 58% less in debt from taxes. Also, since you will be registering from out-of-state, we offer a service for annual renewals for only $119. This isn’t even counting localized taxes and fees, which as we saw earlier can be substantial in California.

Inspections and smog breakdown

Now is the big one: no emissions inspections or annual state inspections at all. No smog checks before selling your vehicle. Since it has an entirely legitimate South Dakota title, you are not beholden to California’s asinine rulings regarding having a “valid” smog check at the time of sale. 

It is not so much that the biennial smog check is pricey; it is more of a nuisance than a significant expense. But the truth of the matter is that eventually, your car or truck will no longer pass emissions at some point in time. There is no getting around this, and with the average age of a car on the road cruising for the past twelve years, you will for sure fail and have to have repairs done at some point.

This is where you may want to go ahead and consider an out-of-state registration for your car that is aging, particularly if you are getting to that eight-year-old mark where you can no longer pay extortion fees to get out of smog checks. Because once you cross over that sunset, you are going to have to deal with the probability that your emissions gear will need work anyway. An eight-year-old car, driving an average of 14,263 miles per year, will have around 114,000 miles on the odometer by year eight, so it is probably going to be due for some repairs soon, especially in exhaust and emissions.

Montana the Beautiful.

So let's do a little quick math: a 2014-model used car with an original sticker price of $40,000 is now going to be worth somewhere in the ballpark of $12,000. Taxes will still run you in the ballpark of $1,200 plus fees, whereas the 4% tax in South Dakota will only be about $480. Why take the calculated risk that your car is getting older and will need emissions repairs anytime. Even after the $480 sales tax plus our reasonable fee of $349 (at time of writing), you are at $829, still around $400 less than just the sales tax for that car in California. If this alone were the determining factor, you still come out ahead titling and registering your car in South Dakota. 

What About Montana Registrations?

Montana has the best tax rates around: zero! The caveat is that you must show residence in the State of Montana, but through the magic of an LLC, you do not need to live there. The process is that you simply must own an LLC in Montana which provides proof of residence for the vehicle.

Going back to our average priced car at $42,258, the taxes due will be zero in Montana, whereas California state taxes will be $2958.06 and local taxes and fees can easily exceed $4500. So in total, by utilizing our Montana LLC Registration Service, you will save a commanding amount of money, time, and headache on your registration - saving $7500 or more is well within the realm of possibility.

Will I Get Hassled About My Out-of-State Plate?

A great and logical question. Frankly, it is nerve-racking to think about getting read the riot act when a cop finds that your driver’s license does not match up with the state that your vehicle is registered in and/or the one you are driving in.

Our solution is an LLC. For example, the Montana LLC program we offer is an LLC from Montana providing the required residency for registration there. The vehicle is then legally an asset belonging to the LLC. Likewise, we offer a New Mexico LLC for our South Dakota option, which affords the same sort of protection; the asset belongs to the LLC rather than you. 

Dirt Legal can help you save time, money, and headaches

California has some things going for it, but affordability is not one of them. Their cost of living is nuts, median housing costs are bonkers, and their car taxes and registration are ridiculous. On top of this, you have to either be extorted with the smog abatement fee or have your car smog checked. Oh, and if you fail, you get strong-armed with another fee, and you have to get your car fixed - and don’t even think about selling it in-state if it failed smog.

Getting an out-of-state title and registration package from Dirt Legal is your iron-clad hedge of defense against this lunacy. Check out our South Dakota Registration Service and our Montana LLC Registration Service now to see how you can get on the road for a whole lot less with the help of Dirt Legal.