Figuring sales tax on a car, step by step
Figuring sales tax on a car takes four steps: start from the agreed price, add any dealer fees your state taxes, subtract what your state lets you subtract, and multiply by the combined state and local rate.
- Price: the negotiated selling price, not the MSRP.
- Trade-in: most states tax only the difference between the new car and your trade-in. Virginia is an exception: it taxes the gross price, even with a trade.[2]
- Rebates: in some states a manufacturer rebate lowers the taxable price (Missouri taxes the price after rebate or trade-in[5]); in others the tax is on the price before the rebate.
- Rate: the state rate plus county and city rates where they apply. Several states charge local tax by where you live, not where you buy.
Does a car's MSRP include sales tax?No. The MSRP and the dealer's advertised price are before sales tax, title and registration. Ask for an out-the-door price to see all three.
Car sales tax by state
The table lists each state's rate on a passenger car and whether it credits a trade-in, from the state's revenue department, DMV or statute. Local taxes can add several points where they apply.
| State | Tax | State rate | Local tax | Trade-in credit | Tax on $35,000 (no trade, state rate) |
|---|---|---|---|---|---|
| Alabama | Sales tax (automotive rate) + local | 2% | Yes | Yes | $700 |
| Alaska | No state sales tax; local sales tax where levied | 0% | Yes | Not confirmed | $0 |
| Arizona | Transaction privilege tax | 5.6% | Yes | Yes | $1,960 |
| Arkansas | Sales and use tax | 6.5% | Yes | Yes | $2,275 |
| California | Sales/use tax | 7.25% | Yes | No | $2,538 |
| Colorado | State + local sales/use tax | 2.9% | Yes | Yes | $1,015 |
| Connecticut | Sales and use tax | 6.35% | No | Dealer sales | $2,223 |
| Delaware | Motor vehicle document fee | 5.25% | No | Yes | $1,838 |
| Florida | Sales and use tax + discretionary sales surtax | 6% | Yes | Yes | $2,100 |
| Georgia | Title ad valorem tax | 7% | No | Dealer sales | $2,450 |
| Hawaii | General excise tax (passed on) / use tax on imports | 4% | Yes | Not confirmed | $1,400 |
| Idaho | Sales/use tax | 6% | No | Dealer sales | $2,100 |
| Illinois | Sales tax | 6.25% | Yes | Yes | $2,188 |
| Indiana | Sales tax | 7% | No | Yes | $2,450 |
| Iowa | Fee for new registration | 5% | No | Yes | $1,750 |
| Kansas | Sales tax and local compensating use tax | 6.5% | Yes | Yes | $2,275 |
| Kentucky | Motor vehicle usage tax | 6% | No | Dealer sales | $2,100 |
| Louisiana | State + local sales tax | 5% | Yes | Yes | $1,750 |
| Maine | Sales tax | 5.5% | No | Yes | $1,925 |
| Maryland | Vehicle excise tax | 6.5% | No | Yes | $2,275 |
| Massachusetts | Sales tax | 6.25% | No | Dealer sales | $2,188 |
| Michigan | Sales tax | 6% | No | Dealer sales | $2,100 |
| Minnesota | Motor vehicle sales tax | 6.875% | No | Yes | $2,406 |
| Mississippi | Sales tax | 5% | No | Yes | $1,750 |
| Missouri | Sales tax | 4.225% | Yes | Yes | $1,479 |
| Nebraska | Sales and use tax | 5.5% | Yes | Yes | $1,925 |
| Nevada | Sales tax | 6.85% | Yes | Yes | $2,398 |
| New Hampshire | No sales tax; municipal permit fee on registration | 0% | No | Not confirmed | $0 |
| New Jersey | Sales and use tax | 6.625% | No | Yes | $2,319 |
| New Mexico | Motor vehicle excise tax | 4% | No | Yes | $1,400 |
| New York | Sales tax | 4% | Yes | Yes | $1,400 |
| North Carolina | Highway use tax | 3% | No | Yes | $1,050 |
| North Dakota | Motor vehicle excise tax | 5% | No | Yes | $1,750 |
| Ohio | Sales/use tax | 5.75% | Yes | Dealer sales | $2,013 |
| Oklahoma | Motor vehicle excise tax + sales tax at titling | 4.5% | No | No | $1,575 |
| Oregon | Vehicle privilege tax (0.5%, new vehicles via dealers); no sales tax | 0.5% | No | Not confirmed | $175 |
| Pennsylvania | Sales tax | 6% | Yes | Yes | $2,100 |
| Rhode Island | Sales tax | 7% | No | Dealer sales | $2,450 |
| South Carolina | Infrastructure maintenance fee (IMF) in place of sales tax | 5% | No | Not confirmed | $500 |
| South Dakota | Motor vehicle excise tax | 4% | No | Yes | $1,400 |
| Tennessee | Sales tax | 7% | Yes | Yes | $2,494 |
| Texas | Motor vehicle sales tax | 6.25% | No | Yes | $2,188 |
| Utah | Sales and use tax | 4.85% | Yes | Yes | $1,698 |
| Vermont | Motor vehicle purchase and use tax | 6% | No | Yes | $2,100 |
| Virginia | Motor vehicle sales and use tax | 4.15% | No | No | $1,453 |
| Washington | Retail sales tax + local + 0.3% motor vehicle sales/lease tax | 6.5% | Yes | Yes | $2,275 |
| West Virginia | Titling (privilege) tax | 6% | No | Dealer sales | $2,100 |
| Wisconsin | Sales/use tax | 5% | Yes | Yes | $1,750 |
| Wyoming | Sales/use tax on vehicles | 4% | Yes | Not confirmed | $1,400 |
New Hampshire charge no general sales tax on a car purchase, though titling fees still apply.
Out-of-state purchases and private sales
You generally pay sales or use tax to the state where you register the car, not the state where you buy it, with credit for tax already paid to another state. Florida, for example, credits a like tax paid elsewhere and collects the difference if the other state's rate was lower.[3] Missouri credits tax paid to another state, and charges no Missouri tax if the car was titled in your name in another state for more than 90 days.[5] Private-party sales are usually taxed when you title the car, sometimes on a book value rather than the price you report; North Carolina, for instance, uses a market value schedule for non-dealer sales.[4]
- Alabama: Casual sales tax: same 2% state rate plus local, paid when registering with county licensing official where purchaser resides (Code of Ala. 40-23-100 to 111).
- Alaska: Not read.
- Arizona: Casual sales between private parties are NOT taxable (ADOR FS-20-04).
- Arkansas: Same tax at registration; used-car tiers by total price (DFA).
- California: DMV collects use tax at registration on total purchase price (cash, assumed debt, FMV of traded property) at the rate for the registration address; credit for other-state tax paid.
- Colorado: If seller isn't required to collect, purchaser pays state and local tax to county clerk at registration.
Sales tax and the rest of the purchase
Sales tax is usually the largest one-time cost after the price itself. Title and registration come on top; the vehicle registration fee calculator covers those. If you finance, the tax is often rolled into the loan, so it also collects interest: the car affordability calculator includes tax in the price you can afford, and the car lease calculator handles states that tax lease payments instead.
Frequently asked questions
How do I calculate sales tax on a car?
Multiply the taxable price (price minus trade-in, in most states) by the combined state and local rate. Then apply your state's minimum or cap, if any.
Do you pay sales tax on a car with a trade-in?
In most states you pay tax only on the price minus the trade-in. California and Oklahoma and Virginia tax the full price.
Do I pay sales tax where I buy the car or where I register it?
Where you register it. Dealers often collect your home state's tax; if you pay tax in the state of purchase, your home state usually gives credit for it.
Does a car MSRP include sales tax?
No. MSRP is the manufacturer's suggested price before tax, title, registration and dealer fees.
Sources
- Motor Vehicle - Sales and Use Tax; Private-Party Purchases and SPV; Total Consideration
- Motor Vehicle Sales and Use Tax
- Sales and Use Tax on Motor Vehicles (GT-800030)
- N.C.G.S. Chapter 105, Article 5A (Highway Use Tax) 105-187.3
- FAQ: Motor Vehicle Titling & Registration
- Publication 34, Motor Vehicle Dealers (Oct 2025); Pub 52 Vehicles and Vessels: Use Tax (Nov 2025)
- Title Ad Valorem Tax (TAVT) - FAQ; Vehicle Taxes - TAVT
- Motor Vehicle and Trailer Sales and Use Tax (guide, updated Sept 15, 2022)