Do You Pay Sales Tax on a Used Car?

You pay gross sales tax on the acquisition of a used automobile, simply as you do a brand new car.

In case your state has a gross sales tax that applies to car purchases, you’ll should pay that tax no matter whether or not the automobile is new or used — and no matter whether or not you purchase from a dealership or a person vendor.

How a lot you’ll pay in taxes will fluctuate relying on the automobile’s worth, the place the automobile will likely be registered, and every other taxes your state levies on automobile purchases.

Usually, most states cost between 5% and 9% for his or her gross sales tax, says Ronald Montoya, senior client recommendation editor at Edmunds. So, in case your used car prices $20,000 and you reside in a state that fees a 6% gross sales tax, the gross sales tax will increase your automobile’s buy value to $21,200, excluding any extra taxes or charges chances are you’ll owe.

Not each state fees a gross sales tax on vehicles, although. The next states don’t cost a gross sales tax:

Along with state gross sales taxes, the county and metropolis you reside in might levy gross sales taxes of their very own. For instance, a resident of Tacoma in Pierce County, Washington, would owe not simply the state gross sales tax of 6.8%, but in addition county and metropolis gross sales taxes which could deliver the whole as much as 10.4%.

Along with your state’s gross sales tax, some states cost a motorcar excise tax, a private property tax or different taxes particularly on car purchases. Round half of all U.S. states cost a further car property tax, says Matt Dundas, Carvana’s director of finance. Verify together with your state’s division of motor autos to make sure you’re paying all required taxes.

Sadly, you can’t keep away from paying gross sales tax on a used automobile.

If you happen to purchase a used automobile from a dealership, the supplier ought to embody any metropolis, county or state taxes you’re accountable for into your automobile’s ultimate buy value. “Whenever you purchase from a dealership, oftentimes they’ll fold [your taxes] into the whole value of the mortgage,” says Montoya.

If you happen to purchase a used automobile from a non-public vendor, you’ll pay the taxes your self if you go to register the car. DMV officers will cost you a gross sales tax based mostly in the marketplace worth of your car, sometimes through the use of an organization like Kelley Blue Ebook, an auto analysis and valuation firm, or by taking a look at comparable automobile gross sales within the area to find out your automobile’s worth.

“I don’t suppose folks can simply get away with saying they paid $5,000 for one thing that prices 5 instances as a lot,” says Montoya.