Resale Certificate for Boat Dealers: Buy Boats, Parts, and Marine Accessories Tax-Free
Boat dealerships are among the highest-ticket retail operations in any category. A single new boat package (hull, motor, trailer) can cost $15,000 to $200,000+ at wholesale. A mid-volume marine dealer purchasing 10 to 30 units per month plus parts, accessories, and service inventory may have $300,000 to $1,000,000 in monthly wholesale volume. At 7% tax, the annual savings are substantial: $252,000 to $840,000.
Like auto and motorcycle dealers, boat dealers operate on the "buy for resale, collect tax from the buyer" model. The resale certificate covers boats, motors, trailers, electronics, and every marine accessory you purchase for resale.
What Makes Boat Sales Tax Unique
Boats have tax complications that land-based vehicles do not:
Registration state vs. purchase state. Boats are mobile property that cross state lines. A customer may buy a boat in your state but register and use it in another state. Sales tax is generally owed in the state where the boat will be primarily used or registered, not necessarily where it is purchased. Many states have reciprocity agreements. As the dealer, you collect tax based on the destination state in many cases.
Use tax on out-of-state purchases. If a customer buys from an out-of-state dealer (common in boating, where buyers travel to find specific models), the buyer's home state typically imposes use tax. Some dealers facilitate this by collecting the buyer's state tax rate.
Marine excise taxes. Some states impose special excise taxes on boats in addition to or instead of sales tax. Connecticut, for example, has a boats sales tax cap. Florida caps the tax on boats at $18,000 per vessel. Rhode Island and Maryland have specific boat tax rates. These caps and special rates make certain states popular for boat purchases.
Federal excise tax. There is no current federal excise tax on recreational boats (the luxury tax on boats over $100,000 was repealed in 1993). However, gas-guzzler and environmental regulations may add costs that are separate from sales tax.
What You Can Buy Tax-Free
- New boats (center consoles, bass boats, pontoons, bowriders, sailboats, cruisers, PWC)
- Used boats (trade-ins purchased for resale, auction purchases)
- Outboard motors (Mercury, Yamaha, Suzuki, Honda, Evinrude)
- Inboard and sterndrive engines (MerCruiser, Volvo Penta, Indmar)
- Boat trailers (sold as part of a boat package or separately)
- Marine electronics (Garmin, Lowrance, Humminbird, Simrad fish finders, GPS, radar)
- Trolling motors (Minn Kota, MotorGuide)
- Propellers (sold to customers)
- Marine batteries (sold to customers)
- Boat covers and canvas (sold at retail)
- Water sports equipment (tubes, wakeboards, skis, life jackets sold at retail)
- Dock accessories sold at retail (bumpers, lines, cleats)
- Marine cleaning and maintenance products (sold at retail)
- Fishing tackle and accessories (if you carry a retail tackle section)
- Apparel and lifestyle merchandise (branded shirts, hats, sunglasses)
What You CANNOT Buy Tax-Free
| Item | Why It Is Taxable |
|---|---|
| Service department tools | Business equipment |
| Boat lift for your marina | Business property |
| Forklift for moving boats | Business equipment |
| Pressure washer (for shop use) | Business equipment |
| Shop consumables (oil absorbent pads, cleaning chemicals for service) | Consumed in service |
| Demo boat (not held for sale) | Business use asset |
| Showroom displays and signage | Business property |
| Marina dock infrastructure | Business property |
Demo boats. Like motorcycle and auto dealers, if you pull a boat from inventory for demo rides and dealer use, you owe use tax on that unit. If you later sell the demo boat, the retail sale is taxable, but you should have already paid use tax when it was converted from inventory to business use. Many dealers keep demo boats in inventory and sell them as "dealer demos" at reduced prices, which is cleaner from a tax perspective.
Manufacturer and Distributor Relationships
Boat manufacturers (OEM). Each manufacturer has its own dealer network:
- Brunswick Corporation (Mercury Marine engines, Boston Whaler, Sea Ray, Lund, Bayliner, Harris, Crestliner, Princecraft)
- Malibu Boats (Malibu, Axis, Cobalt, Pursuit, Maverick, Pathfinder, Hewes, Cobia)
- Marine Products Corporation (Chaparral, Robalo)
- YANMAR (sailboat engines, commercial marine)
- Yamaha Marine (outboard motors, WaveRunner PWC)
- BRP (Evinrude outboards, Sea-Doo PWC, Alumacraft, Manitou pontoons)
- Polaris / Bennington (Bennington and Godfrey pontoons)
Parts and accessories distributors. These are the equivalent of auto parts distributors for the marine industry:
- Land 'N' Sea / Barletta Marine Group (largest marine accessories distributor)
- Aramsco / Marine Accessories (regional distributors)
- Attwood / Mercury Marine (OEM and aftermarket parts)
- MarineMax (primarily retail, but also a major dealer group)
- West Marine Pro (commercial division of West Marine)
- Wholesale Marine (online marine parts distributor)
Your resale certificate is part of every dealer agreement and distributor account application.
Service Department
Boat dealers typically operate busy service departments for winterization, seasonal commissioning, engine maintenance, rigging, and electronics installation.
Parts sold and installed on customer boats. Impellers, anodes, spark plugs, belts, oil filters, lower unit gear lube, marine electronics installed at the customer's request. These parts are sold to the customer (the invoice lists parts and labor). Your resale certificate covers the wholesale purchase. You charge the customer retail price plus applicable tax.
Shop supplies consumed during service. Oil absorbent pads, shop rags, cleaning solvents, sealants used by your technicians. These are consumed in providing service, not sold. Business supplies.
Winterization and storage. Winterization chemicals (antifreeze pumped through the engine, fogging oil, fuel stabilizer) are consumed in providing a service. The customer pays for the winterization service, not for a bottle of antifreeze. These are business supplies.
Shrink wrap. If you shrink-wrap customer boats for winter storage, the wrap material is consumed in providing a service. However, some dealers add a line item for "shrink wrap" on the invoice. If you are billing the customer for the physical wrap material (selling them the wrap), it may qualify as a resale item. If the wrap is bundled into the storage service, it is a business supply.
Trailer Sales and Registration
Boat trailers are often sold as part of a "boat package" (hull + motor + trailer). Tax treatment:
Trailer as part of a package sale. The total package price (boat + motor + trailer) is typically the taxable amount. In some states, trailers require separate registration and may be taxed separately from the boat.
Trailer-only sales. Selling a trailer without a boat is a standard retail sale of tangible property. Your certificate covers the wholesale purchase.
Trailer registration. Unlike boats, trailers are highway vehicles and require DMV registration and plates. This is separate from the sales tax on the purchase.
Dollar Savings
| Dealer Size | Monthly Wholesale Purchases | Annual Tax Savings (7%) |
|---|---|---|
| Small single-line dealer | $100,000 | $84,000 |
| Mid-size multi-brand dealer | $300,000 | $252,000 |
| Large-volume dealer with service | $600,000 | $504,000 |
| Multi-location dealer group | $1,500,000+ | $1,260,000+ |
Common Mistakes
Not understanding destination-based tax collection. When a customer buys a boat to use in another state, you may need to collect that state's tax rate rather than your own. Getting this wrong exposes you to liability in both states. Work with your accountant on multi-state boat sales.
Forgetting use tax on demo fleet. Every boat you use for demos, fishing tournaments, or boat shows (that is not actively for sale) requires use tax payment. Auditors compare inventory records to sales records.
Treating all winterization supplies as resale. Antifreeze pumped through an engine, fogging oil sprayed into cylinders, and fuel stabilizer added to the tank are consumed in providing a service. They are not sold to the customer as products.
Not collecting tax on water sports and lifestyle merchandise. Tubes, wakeboards, life jackets, and branded apparel sold in your showroom are taxable retail sales. Dealers sometimes focus so heavily on unit sales that accessories get overlooked in tax compliance.
Ignoring trade-in tax credits. Many states allow customers to receive a tax credit for their trade-in (pay tax only on the difference between the new boat price and the trade-in value). Getting this calculation right saves your customers money and avoids audit adjustments.
How to Get Started
- Apply for your resale certificate through your state or our service. You also need a dealer license from your state's marine or motor vehicle authority.
- Provide the certificate to all manufacturers and distributors. Brunswick, Yamaha, Mercury, and your accessories distributors need it on file.
- Set up your DMS (dealer management system) for marine-specific tax rules. Boat sales, parts sales, service labor, storage fees, and trailer sales may all have different tax treatments.
- Understand your state's boat tax caps or special rates. Several states cap or reduce sales tax on boats.