Car sales tax · Alabama

Alabama car sales tax

Alabama car sales tax is a reduced 2% state automotive rate plus city and county sales tax, charged on the net price after a trade-in. Manufacturer rebates do not lower it. A $30,000 car with an $8,000 trade, a $499 dealer fee and a $2,000 rebate costs $1,124.95 at a 3% local rate.

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Alabama car sales tax calculator

State rules in force November 2026

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Alabama: sales taxEstimate

Tax due$1,124.953.75% of the price
Price after trade-in, with tax and fees$21,623.95before title and registration
Price$30,000.00
Taxable dealer fees$499.00
Rebate (still taxed)−$2,000.00
Trade-in (credited)−$8,000.00
Taxable amount$22,499.00
Sales tax (automotive rate) + local (2% of $22,499)$449.98
Local tax (3%)$674.97
Total tax$1,124.95

The trade-in credit saves $400.00 of tax.

How it is calculated. Tax = (price + dealer fee − trade-in) × (2% state + local rate). Manufacturer rebates are part of the taxable price.

Sales tax on a car in Alabama: the 2% automotive rate

Alabama taxes cars at a reduced state rate of 2%, compared with 4% for most other goods, plus local city and county taxes.[1] When a used vehicle is taken in trade, the tax is levied on the net difference; a trade worth more than the new car cannot create a deduction.[1]

Alabama car sales tax examples
CaseTaxShare of price
$30,000 car, $8,000 trade, $499 fee, $2,000 rebate, 3% local$1,124.953.75%
Revenue guide example: $50,000 + $500 fee, $5,000 rebate, state only$1,010.002.02%
$15,000 used car, private sale, 4% local$900.006.00%
$45,000 truck, $20,000 trade, 2.5% local$1,125.002.50%

Rebates and dealer fees are taxed

Manufacturer rebates of any type are taxable when applied to the price. The Department of Revenue's example: a $50,000 vehicle with a $500 dealer fee and a $5,000 rebate assigned to the customer costs the buyer $45,500, but the taxable amount is $50,500, so the 2% state tax is $1,010.[1]

Local tax: dealer location or your home

  • Dealer sales: the dealer collects the city and county tax where the dealership is, and only one city and one county tax applies whatever the rate.[1]
  • Private (casual) sales: you pay state and local use tax when you register the car in the county where you live.[1]
  • Bought out of state: Alabama credits taxes legally paid to another state.[1]

Why Alabama looks cheapThe 2% state rate is one of the lowest on vehicles, but local automotive rates differ a lot between cities, so the total depends on where you buy or live.

Compare states on the car sales tax calculator, include the tax in a budget with the car affordability calculator, or see the yearly total on the cost of owning a car calculator.

Frequently asked questions

What is the sales tax on a car in Alabama?

2% state automotive rate plus city and county tax, on the price after trade-in.

Does Alabama tax manufacturer rebates on cars?

Yes. Rebates are part of the taxable price.

How is sales tax paid on a private car sale in Alabama?

The buyer pays state and local use tax when registering the car in their home county.

Sources

  1. Automotive Sales, Use, Lease Tax Guide; Casual Sales Tax page · Alabama Department of Revenue, accessed November 14, 2026