Frequently Asked Questions (FAQ)
Car sales taxes in the USA by state
In the United States, car sales tax is applied on purchasing a new and used car, generally on
the car's selling price. The car sales tax rates vary from state to state in the US, and some
states have insignificant local fees.
When you purchase a new car from a dealership, you will be required to pay sales tax on the
total buy price of the vehicle. Your sales tax rate will depend on the state and local tax laws
where you live.
If you buy a new car for $10000 with a 5% sales tax rate, you pay $500 sales tax while
purchasing.
If you buy a used car from a personal seller, you may not pay sales tax. But if you purchase a
used car from a dealership, you should pay sales tax on the total purchase price like a new
car.
The car sales tax system in the US can be quite complex, as the tax rates and laws vary from
state to state.
The sales tax rates for car purchases vary by state in the USA. Here are the current (as of
2024) state sales tax rates for car purchases:
Alabama: 2.00% to 4.00%
Alaska: No state sales tax, but local municipalities may have sales taxes
Arizona: 5.60% to 10.725%
Arkansas: 6.50%
California: 7.25% to 10.50%
Colorado: 2.90% to 11.20%
Connecticut: 6.35%
Delaware: No sales tax
Florida: 6.00% to 7.50%
Georgia: 4.00% to 8.90%
Hawaii: 4.00%
Idaho: 6.00% to 8.50%
Illinois: 6.25%
Indiana: 7.00%
Iowa: 5.00% to 7.00%
Kansas: 6.50%
Kentucky: 6.00%
Louisiana: 5.00%
Maine: 5.50%
Maryland: 6.00%
Massachusetts: 6.25%
Michigan: 6.00%
Minnesota: 6.50% to 8.875%
Mississippi: 5.00% to 7.00%
Missouri: 4.225%
Montana: No sales tax
Nebraska: 5.50%
Nevada: 6.85%
New Hampshire: No sales tax
New Jersey: 6.625%
New Mexico: 5.125% to 9.0625%
New York: 4.00% to 8.875%
North Carolina: 3.00% to 7.50%
North Dakota: 5.00%
Ohio: 5.75%
Oklahoma: 3.25% to 11.50%
Oregon: No sales tax
Pennsylvania: 6.00%
Rhode Island: 7.00%
South Carolina: 5.00% to 9.00%
South Dakota: 4.50%
Tennessee: 7.00%
Texas: 6.25% to 8.25%
Utah: 4.70% to 8.35%
Vermont: 6.00%
Virginia: 4.30%
Washington: 6.50%
West Virginia: 6.00%
Wisconsin: 5.00% to 5.50%
Wyoming: 4.00%
Note:
Rates may change, and additional local taxes applied may depend on the location of the car
purchase.
Car sales tax rate high to low in the USA by state
Nevada, Kansas, California, Illinois, and Indiana are the top five states with the highest tax rates.
Nevada car sales tax rate in the USA
8.25%
Kansas car sales tax rate in the USA
7.50%
California car sales tax rate in the USA
7.25%
Illinois car sales tax rate in the USA
7.25%
Indiana car sales tax rate in the USA
7.00%
Rhode Island car sales tax rate in the USA
7.00%
Tennessee car sales tax rate in the USA
7.00%
Utah car sales tax rate in the USA
6.85%
New Jersey car sales tax rate in the USA
6.63%
Georgia car sales tax rate in the USA
6.60%
Arkansas car sales tax rate in the USA
6.50%
Minnesota car sales tax rate in the USA
6.50%
Washington car sales tax rate in the USA
6.50%
Connecticut car sales tax rate in the USA
6.35%
Massachusetts car sales tax rate in the USA
6.25%
Texas car sales tax rate in the USA
6.25%
Florida car sales tax rate in the USA
6.00%
Idaho car sales tax rate in the USA
6.00%
Kentucky car sales tax rate in the USA
6.00%
Maryland car sales tax rate in the USA
6.00%
Michigan car sales tax rate in the USA
6.00%
Pennsylvania car sales tax rate in the USA
6.00%
Vermont car sales tax rate in the USA
6.00%
West Virginia car sales tax rate in the USA
6.00%
Wyoming car sales tax rate in the USA
6.00%
Ohio car sales tax rate in the USA
5.75%
Arizona car sales tax rate in the USA
5.60%
Maine car sales tax rate in the USA
5.50%
Nebraska car sales tax rate in the USA
5.50%
Iowa car sales tax rate in the USA
5.00%
Mississippi car sales tax rate in the USA
5.00%
North Dakota car sales tax rate in the USA
5.00%
South Carolina car sales tax rate in the USA
5.00%
Wisconsin car sales tax rate in the USA
5.00%
Louisiana car sales tax rate in the USA
4.45%
Missouri car sales tax rate in the USA
4.23%
Virginia car sales tax rate in the USA
4.15%
Hawaii car sales tax rate in the USA
4.00%
New Mexico car sales tax rate in the USA
4.00%
New York car sales tax rate in the USA
4.00%
South Dakota car sales tax rate in the USA
4.00%
Oklahoma car sales tax rate in the USA
3.25%
North Carolina car sales tax rate in the USA
3.00%
Colorado car sales tax rate in the USA
2.90%
Alabama car sales tax rate in the USA
2.00%
Alaska car sales tax rate in the USA
0.00%
Delaware car sales tax rate in the USA
0.00%
Montana car sales tax rate in the USA
0.00%
New Hampshire car sales tax rate in the USA
0.00%
Oregon car sales tax rate in the USA
0.00%
Car sales tax rate low to high in the USA by state
Alaska, Delaware, Montana, New Hampshire, and Oregon are the top five states with the lowest tax rates.
Alaska car sales tax rate in the USA
0.00%
Delaware car sales tax rate in the USA
0.00%
Montana car sales tax rate in the USA
0.00%
New Hampshire car sales tax rate in the USA
0.00%
Oregon car sales tax rate in the USA
0.00%
Alabama car sales tax rate in the USA
2.00%
Colorado car sales tax rate in the USA
2.90%
North Carolina car sales tax rate in the USA
3.00%
Oklahoma car sales tax rate in the USA
3.25%
Hawaii car sales tax rate in the USA
4.00%
New Mexico car sales tax rate in the USA
4.00%
New York car sales tax rate in the USA
4.00%
South Dakota car sales tax rate in the USA
4.00%
Virginia car sales tax rate in the USA
4.15%
Missouri car sales tax rate in the USA
4.23%
Louisiana car sales tax rate in the USA
4.45%
Iowa car sales tax rate in the USA
5.00%
Mississippi car sales tax rate in the USA
5.00%
North Dakota car sales tax rate in the USA
5.00%
South Carolina car sales tax rate in the USA
5.00%
Wisconsin car sales tax rate in the USA
5.00%
Maine car sales tax rate in the USA
5.50%
Nebraska car sales tax rate in the USA
5.50%
Arizona car sales tax rate in the USA
5.60%
Ohio car sales tax rate in the USA
5.75%
Florida car sales tax rate in the USA
6.00%
Idaho car sales tax rate in the USA
6.00%
Kentucky car sales tax rate in the USA
6.00%
Maryland car sales tax rate in the USA
6.00%
Michigan car sales tax rate in the USA
6.00%
Pennsylvania car sales tax rate in the USA
6.00%
Vermont car sales tax rate in the USA
6.00%
West Virginia car sales tax rate in the USA
6.00%
Wyoming car sales tax rate in the USA
6.00%
Massachusetts car sales tax rate in the USA
6.25%
Texas car sales tax rate in the USA
6.25%
Connecticut car sales tax rate in the USA
6.35%
Arkansas car sales tax rate in the USA
6.50%
Minnesota car sales tax rate in the USA
6.50%
Washington car sales tax rate in the USA
6.50%
Georgia car sales tax rate in the USA
6.60%
New Jersey car sales tax rate in the USA
6.63%
Utah car sales tax rate in the USA
6.85%
Indiana car sales tax rate in the USA
7.00%
Rhode Island car sales tax rate in the USA
7.00%
Tennessee car sales tax rate in the USA
7.00%
California car sales tax rate in the USA
7.25%
Illinois car sales tax rate in the USA
7.25%
Kansas car sales tax rate in the USA
7.50%
Nevada car sales tax rate in the USA
8.25%
Why should you know about car sales tax in the USA?
Car buying can be exciting, but hidden costs can quickly turn that excitement into worry. The reason is the car sales tax.
What is car sales tax?
Car sales tax is a fee imposed by states on the purchase/sell of a new or used vehicle. The rate varies from state to state, you can check above.
I am a buyer, why does it matter to me?
Beyond legal obligation, car sales tax impacts the overall cost of your vehicle. You must consider this tax liability into your budget; in some cases, you may have to pay taxes while buying.
Future trends in car sales tax
Forecasting future trends in car sales tax in the USA on the economy, laws, and how the car industry is changing. As more cars become electric, the rules about taxes might change to encourage people to use electric cars. The car market around the world, like in China or Europe, may impact taxes on cars.
Why is car sales tax collected?
Car sales tax is a revenue source for state governments, used to fund public services and infrastructure projects.
Can I avoid paying car sales tax?
In most cases, car sales tax is mandatory
How does trade-in value affect sales tax?
In some states, the trade-in value is deducted from the purchase price before calculating sales tax, it helps to reduce the overall tax amount.
Are there federal taxes on car sales?
No, car sales tax is imposed at the state level only. There are no federal taxes.
How often do states update their sales tax rates?
Sales tax rates can be updated anytime, and the frequency varies by state. You should stay informed about any changes.
Is car sales tax the same in every state?
No, car sales tax differs by state and even within local regulations. It's necessary to know the exact tax rates applicable to your area.
Can I deduct the trade-in value from the purchase price when calculating sales tax?
In some states, you can deduct the trade-in value from the purchase price before calculating sales tax, potentially reducing the tax burden.
Do rebates and incentives affect the amount of sales tax I owe?
Yes, rebates and incentives provided by manufacturers or dealerships can impact the taxable amount.
How can I confirm the accuracy of my car sales tax calculation?
Using a car sales tax calculator provides accuracy by considering different factors such as purchase price, trade-in value, rebates, and tax rates specific to your location.
Are there any online tools available to help me calculate car sales tax?
Yes, many online car sales tax calculators are available, but carsalestaxcalculator.com is the best among them.
Do I have to pay sales tax on a used car purchase?
In most cases, yes. Sales tax is usually applied to both new and used car purchases, but specific exemptions or reduced rates may apply in certain situations.
What if I purchase a car out of state?
If you purchase a car out of state, you may still be required to pay sales tax in your home state when registering the vehicle. However, some states offer credits or exemptions for taxes paid in other states.
Can I negotiate the amount of sales tax when buying a car?
Sales tax is determined by government regulations and is not negotiable. However, you may be able to negotiate the vehicle purchase, such as the purchase price or financing terms.
Is sales tax included in the monthly car payment?
Sales tax is typically not included in the monthly car payment unless specified otherwise by the lender or dealership. It is usually paid upfront or rolled into the total amount financed.
Do I have to pay sales tax if I lease a car?
Yes, sales tax is generally applied to leased vehicles. However, the tax may be calculated differently compared to a traditional purchase, so it's essential to review the lease agreement carefully.
Are there any exemptions or discounts available for certain types of vehicles?
Some states offer exemptions or discounts for specific types of vehicles, such as electric or hybrid cars, vintage vehicles, or vehicles used for certain purposes like agriculture or commercial transportation.
Do military personnel or veterans allow for any sales tax exemptions?
Military personnel and veterans may qualify for sales tax exemptions or discounts in some states. It's advisable to check with the state's Department of Motor Vehicles or taxation authority for specific eligibility criteria.
Can I deduct car sales tax on my federal income tax return?
In some cases, you may be able to deduct sales tax paid on a vehicle purchase from your federal income tax return. However, eligibility and limitations vary based on individual circumstances and tax laws.
What if I overpaid sales tax on a vehicle purchase?
If you believe you overpaid sales tax on a vehicle purchase, you may be eligible for a refund or credit from the state's Department of Revenue. Contact them for guidance on the process.
Is sales tax calculated based on the total purchase price before or after trade-in value?
The treatment of trade-in value concerning sales tax varies by state. Some states allow you to deduct the trade-in value from the purchase price before calculating sales tax, while others do not.
Do I have to pay sales tax if I buy a car from a private seller?
Yes, sales tax may still be applicable when buying a car from a private seller, depending on the state's regulations. In some cases, private sales may be subject to lower tax rates or exemptions compared to dealership purchases.
Can I finance the sales tax amount along with the vehicle purchase?
Financing the sales tax amount along with the vehicle purchase is possible in some cases. However, it's essential to consider the implications of financing additional amounts, such as increased loan payments or interest charges.
What if I move to a different state shortly after purchasing a car?
If you move to a different state shortly after purchasing a car, you may need to register the vehicle in your new state of residence and pay any applicable sales tax or registration fees based on the new location's regulations.
Are there any exemptions for low-income individuals or families when paying car sales tax?
Some states offer exemptions or reduced rates for low-income individuals or families when paying car sales tax. Eligibility criteria and application processes vary by state, so it's essential to inquire with the appropriate authorities.
How does the sales tax on a leased car differ from that on a purchased car?
Sales tax on a leased car is typically calculated based on the monthly lease payments rather than the total purchase price of the vehicle. The tax rate and calculation method may vary depending on state regulations and lease terms.
Can I claim a sales tax deduction on my federal income tax return if I itemize deductions?
Yes, if you itemize deductions on your federal income tax return, you may be eligible to claim a deduction for state and local sales taxes paid, including sales tax on a vehicle purchase. This deduction is subject to certain limitations and eligibility criteria.
Do I have to pay sales tax on a car gifted to me?
The sales tax on a gifted car varies by state. In some states, the receiver may be required to pay sales tax based on the vehicle's appraised value, while others may offer exemptions or reduced rates for gifted vehicles.
What if I purchase a car through a private party but finance it through a dealership?
If you purchase a car through a private party but finance it through a dealership, the dealership may handle the sales tax collection and payment as part of the financing process. It's necessary to review the sales contract and financing agreement for details on tax obligations.
Can I negotiate the sales tax rate when purchasing a car?
Sales tax rates are determined by government regulations and are generally non-negotiable. However, you may have the opportunity to negotiate other aspects of the vehicle purchase, such as the purchase price, financing terms, or additional fees.
Do I have to pay sales tax on a car I receive as an inheritance?
In some states, the recipient may be exempt from paying sales tax on inherited vehicles, while others may require tax payment based on the vehicle's appraised value at the time of inheritance.
