The Montana License Plate Loophole: A Tax-Evasion Trend Among Supercar Owners

You might have noticed an unusual uptick in Montana license plates while driving around town. Often, these plates are affixed to high-end vehicles that require a significant tax bracket to claim ownership. As any "Yellowstone" fan can confirm, more wealthy individuals are purchasing property in the state. However, the real anomaly is that many of the world’s fastest supercars are sporting Montana plates far from the state’s borders.

The Appeal of Montana Plates

The disparity in license plates is particularly noticeable in states like California and New Jersey, known for their higher property taxes and stricter automobile emissions standards. Wealthy car enthusiasts are increasingly registering their vehicles in Montana to circumvent these taxes and regulations. This practice is not only common but also perfectly legal, thanks to a loophole in Montana’s vehicle registration laws.

Montana does not require vehicle emissions tests or annual inspections, making it an attractive option for those looking to save money on high-end vehicles. The state also does not charge sales tax on personal property, allowing owners to save tens of thousands of dollars when registering expensive cars.

How the Montana Auto Loophole Works

According to various sources, the super-wealthy are taking full advantage of the Montana loophole. In 2021, around 10% of the world’s turbocharged McLaren P1 supercars—valued between $1 million and $2 million—were registered in Montana. However, you would be hard-pressed to find many of these luxury vehicles cruising the ranch lands and mountain passes that Montana is known for.

To take advantage of this loophole, car owners typically need to establish a Limited Liability Corporation (LLC) in Montana. Setting up an LLC can cost as little as $1,000, and once the modest registration fees are paid, owners can legally drive their vehicles anywhere in the country. This raises ethical questions about evading taxes that support local infrastructure and services.

The Growing Number of Registered Vehicles

Montana currently boasts the highest number of registered cars per person in the United States, despite having only 1.1 million permanent residents according to the 2020 Census. Reports indicate that there are nearly 11,000 high-end vehicles—from brands like Ferrari, Bugatti, Aston Martin, and Pagani—registered in the state. This trend has raised eyebrows and prompted some states to consider measures to close the loophole.

States Cracking Down on the Loophole

While many wealthy car owners seem unfazed by the implications of dodging local taxes, some states are taking action. Utah, for instance, has enacted laws allowing for the investigation of residents with cars and boats registered elsewhere but insured in Utah. The aim is to recover millions in back taxes believed to be owed.

California is also tightening its regulations. The state now requires residents to store vehicles purchased out of state—like those registered in Montana—in the original location for up to 12 months before bringing them into California. The state is actively flagging Montana license plates and tracking their registration dates to enforce penalties on those who do not comply.

Montana’s Stance on the Loophole

Interestingly, Montana itself has not taken significant steps to close the loophole. While some legislators have proposed changes to benefit the state, the most recent efforts have only resulted in a modest $825 fee on registered vehicles worth over $150,000. Additionally, there is a "local option" tax of 0.7% on vehicles, but this is optional by county.

Conclusion

The Montana license plate loophole has become a hot topic among car enthusiasts and lawmakers alike. While it offers significant financial benefits to wealthy individuals, it raises ethical questions about tax evasion and the impact on local communities. As states like California and Utah take steps to close the loophole, it remains to be seen how Montana will respond to this growing trend. For now, the allure of tax-free luxury vehicle registration continues to draw supercar owners to Big Sky Country.