For instance: As of 2020, New York has a car tax rate of 4 percent plus local taxes, whereas next-door neighbor Massachusetts has a state car tax rate of 6.25 percent, with some local rates much higher.
How Much Sales Tax Do I Need to Pay for My Motor Vehicle?ĭetermining how much sales tax you need to pay depends on your home state's laws and the state in which you bought the car. You may have to pay local taxes on top of state ones. Also, keep in mind that there are approximately 10,000 sales tax jurisdictions in the U.S., including cities, counties, and other districts, and each jurisdiction has its own tax laws. You don't want to be in a position where you must pay the sales tax twice because the dealer forgot to send the appropriate paperwork to your local DMV. To avoid confusion when you register at the DMV, make sure you get a bill of sale from the dealer for your vehicle purchase price with the tax included. Dealers often tax out-of-state buyers the amount they'd pay if they lived in the state in which they're buying the vehicle, so you may have to make up the difference if your home state's sales tax is higher.
Your out-of-state driver's license would suffice as proof.īefore the Department of Motor Vehicles in your home state can register your new vehicle, they may check the bill of sale to ensure you paid the sales tax, so you shouldn't try to skimp on paying it. Some states allow the dealer not to collect the tax payment if you prove that the vehicle will not be registered in that particular state. That way, you don't have to deal with the fuss of trying to follow each state's unique tax laws. The car dealer will follow the sales tax collection laws of their own state. Typically, when you buy a car in a different state than your home state, the car dealer collects your sales tax at the time of purchase and sends it to your home state's relevant agency. The DMV may also ask you for the vehicle identification number to verify the car matches the out-of-state title you provide.
Ensure you have enough money on hand to pay both the registration fee and the local sales tax. When you visit your local Department of Motor Vehicles(DMV), you will need to produce the out-of-state title and the bill of sale from the seller. If you decide to purchase your new car from a private seller in another state, your home state will collect the necessary sales tax once you register the vehicle. However, bear in mind that if you plan to drive it back to your home state, you will require a temporary registration card for the state in which you conclude the deal. You will not pay the sales tax to the state where you purchased the vehicle. If I Buy a Car in Another State, Where do I Pay Sales Tax?Īccording to CarFax, you will need to pay your sales tax to the state where you register the vehicle, i.e., in your home state or where you will reside with the car.
This may leave you wondering if I buy a car in another state, where do I pay sales tax? Before you go car buying across state lines, make sure you know how to pay the state sales tax properly to avoid penalties and a tax evasion fine. However, each state differs in its sales tax rulings. In the U.S., most states levy a sales tax when you buy a new vehicle.