Car Sales Tax By State 2025

Buying a car? Sales tax varies widely by state. This guide breaks down car sales tax rates across the U.S. so you know what to expect before signing the papers.

Car Sales Tax By State

This table lists the car sales tax rate for each U.S. state in alphabetical order, making it easy to compare what you’ll pay when purchasing a vehicle.

*Rates shown are state-level base sales tax rates. Local, county, or city taxes and additional fees may apply and increase the total amount paid.

States With The Highest Car Tax

1. Nevada – 8.25%
2. California – 7.25%
3. Illinois – 7.25%
4. Georgia – 7.00%
5. Indiana – 7.00%
6. Mississippi – 7.00%
7. Rhode Island – 7.00%
8. Tennessee – 7.00%
9. Minnesota – 6.88%
10. New Jersey – 6.63%

States With The Lowest Car Tax

1. Alaska – 0.00%
2. Delaware – 0.00%
3. Montana – 0.00%
4. New Hampshire – 0.00%
5. Oregon – 0.00%
6. North Carolina – 3.00%
7. Oklahoma – 3.25%
8. Colorado – 2.90%
9. South Dakota – 4.00%
10. New Mexico – 4.00%

Who Pays The Tax On A Private Car Sale

In a private car sale, the buyer is generally responsible for paying the car sales tax — not the seller. Here’s how it works:

When you buy a car from a private individual (rather than a dealership), the seller typically collects only the agreed-upon purchase price. You, as the buyer, must then report the sale and pay any required taxes when you register the vehicle with your state’s Department of Motor Vehicles (DMV) or equivalent agency.

Most states calculate the tax based on either:

• The purchase price listed on the bill of sale, or
• The fair market value of the vehicle (to prevent underreporting the price to avoid taxes).

You’ll usually pay this tax at the same time you pay your title transfer fee and registration fees. Some states also require you to show proof of payment (like a receipt or completed form) before they’ll issue your new title and registration.

Are There Sales With No Car Sales Tax?

Yes, there are a few states where you can buy a car without paying any state-level car sales tax. Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a state sales tax on vehicle purchases. This makes buying a car in these states less expensive upfront compared to states with higher tax rates.

However, it’s worth noting that some of these states may still have title, registration, or local fees that apply. Buyers in these states generally save more compared to those in states with higher sales tax rates, but they should still check for any local requirements before completing a purchase.

Can I Get A Tax Break When I Buy A Car?

Yes, in many cases, you can get a tax break when you buy a car, but it depends on your state and situation. Some states allow you to deduct the value of your trade-in vehicle from the purchase price before calculating the sales tax, which lowers the amount of tax you owe.

For example, if you trade in a car worth $10,000 on a $30,000 purchase, you may only pay tax on $20,000. A few states also cap the maximum amount of sales tax you can be charged on a vehicle purchase, which can lead to savings on higher-priced cars.

At the federal level, you may qualify for tax credits if you purchase certain electric or plug-in hybrid vehicles. These credits can be worth thousands of dollars, depending on the make, model, and battery requirements of the car.

State and local governments may also offer additional incentives for eco-friendly vehicles, such as rebates or reduced registration fees, making it worthwhile to check for available programs before you buy.