Boats and Related Items
What Sales and Use Tax is Due?
The 3.00% rate of sales and use tax applies to the sales price or purchase price of a boat, with a maximum tax of $1,500 per article. The sales price of a boat includes charges for all accessories attached to the boat when it is delivered to the purchaser, labor for installing such parts and accessories, freight or delivery charges, and any other charges for preparing the boat for sale. Examples of accessories include a boat motor, fender, boat or motor control, compass, windshield, horn, and light.
Boats are not subject to the local and transit rates of sales and use tax.
What Qualifies as a Boat?
For purposes of sales and use tax, a boat is a watergoing vessel propelled by engine, sail, oar, paddle or similar means, which is designed to be used to travel from place to place by water. A boat does not include boards, innertubes, and similar items used for water-based recreation.
Examples of Boats
The following are considered a boat:
- Yacht
- Sailboat
- Jet ski
- Canoe
- Kayak
- Dinghy
- Paddle boat
- Pontoon boat
- Jon boat
- Houseboat (self-propelled)
- Ski boat
- Rowboat
- Motorboat
- Tugboat
- Lifeboat
- Fan boat
Examples that are Not Boats
The following examples are not boats. These items are subject to the general state, and applicable local and transit rates of sales and use tax.
- Wind surfer
- Surfboard
- Innertube
- Sailboard
- Paddle board
- Skim board
- Boogie board
- Knee board
- Jet board
- Kite board
- Foil board or hydrofoil board
- A float
- Hovercraft
- Amphibious ATV
- Toys
How to File and Pay?
File and pay sales and use tax due on the sale of boats on Form E-500, Sales and Use Tax Return, or through the Department’s online filing and payment system.
A business or person who is not registered with the Department and is required to remit use tax on a boat must file Form E-555, Boat and Aircraft Use Tax Return.
Items Related to Boats
- Parts and Accessories - Retail sales of parts and accessories for boats that are not attached to the boat when the boat is delivered to the purchaser are subject to the general state, and applicable local and transit rates of sales and use tax.
- Safety Equipment - Retail sales of life jackets, life rings, cushions, flares, fire extinguishers, and rope are subject to the general state, and applicable local and transit rates of sales and use tax notwithstanding that the tangible personal property may be sold with the boat.
- Boat Trailers - A retail sale of a boat with a boat trailer is considered to be the sale of two separate articles. A boat trailer is a motor vehicle that is exempt from sales and use tax and subject to the highway use tax imposed under Article 5A of Chapter 105 of the North Carolina General Statutes. The highway use tax must be paid to the Commissioner of Motor Vehicles by the dealer, the purchaser, or other applicant for a certificate of title at the time of making application.
How Do I Find More Resources?
The Department’s Sales and Use Tax Bulletins (“SUTB”) provide additional information about the sale of boats and related items.
- SUTB 15 – Boats and Related Items;
- SUTB 29 – Commercial Fishing; and
- SUTB 24-8 – Direct Pay Permit for Certain Boat Charges and Services.