Same-sex Couples to Benefit from Additional Sales, Use, and Excise Tax Exemptions following Obergefell


As all of you know by now, last week Justice Kennedy forever eclipsed Cher in gay icon status. Many of us will never forget where we were when we first learned of SCOTUS’s ruling. I was at Krispy Kreme buying donut holes for colleagues to honor the passage of Louisiana’s “Deauxnut Fairness Act”. I was considering their limited-time Southern Summertime flavors when my phone erupted with text messages from celebrants of the news. It was just the swing vote I needed. I sprung for Lemon Kreme.  

Within the “constellation of benefits that the States have linked to marriage”, same-sex couples may now benefit from transaction tax exemptions previously out of reach. Perhaps the most common of these exemptions involves the transfer of motor vehicles between spouses. Such transfers are often exempt from states’ sales and use or excise taxes on motor vehicles. A quick survey of the remaining states that had their same-sex marriage bans overturned last Friday revealed this exemption in North Dakota, South Dakota, and Kentucky. Texas provides a reduced $10 gift tax in lieu of motor vehicle sales tax for motor vehicles gifted between spouses. 

With the status of their marriages finally settled, same-sex couples can be assured of the continued benefit of this and other spousal exemptions in other states as well. For instance, Oklahoma’s sales and use tax exemption for property and services purchased by the surviving spouse of a disabled veteran is now assured to continue to apply to same-sex surviving spouses. Missouri provides an exemption for handicraft items sold by a senior citizen or the senior citizen’s spouse. This exemption will likewise continue to apply to same-sex spouses of senior citizens.     

Transaction tax exemptions are admittedly a minor star within the constellation of benefits that marriage confers. Nonetheless, they come with real financial consequences for many couples. This underscores the fact that attaining marriages’ benefits seldom ends at the county clerk’s office. We have yet to witness how departments of motor vehicles, departments of revenue, and other agencies will view their obligations under Obergefell.    

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Will additional litigation be needed to clarify the application of Obergefell to state and local tax law? Will you be taking advantage of Louisiana’s Deauxnut Fairness Act? 

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