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Car Sales Tax By State

Car Sales Tax By State

Navigating Car Sales Tax at State Level

Buying a car is, no doubt, a major expense. Beyond the vehicle's base price, numerous additional costs can significantly inflate the total out-of-pocket expenditure. One highly variable, yet inevitable expense encountered during car purchase has to do with sales tax. Charged in most U.S states, the sales tax on a vehicle can stir up quite a shock, especially when it accounts for a sizable chunk of the vehicle's price. While some states lean towards leniency with reduced sales tax requirements, others adopt a higher tax rate. Interestingly, a small selection of states, including Alaska, Delaware, Montana, New Hampshire, and Oregon, levies no car sales tax at all.

  • Kansas tops the list with the highest car sales tax rate of 7.5%. Closely trailed by California at 7.3%, it's important to note that these higher rates can significantly influence the total cost of car ownership in these states.
  • Five states have no sales tax on car sales at all — Alaska, Delaware, Montana, New Hampshire, and Oregon.
  • The Midwest and South-East exhib moderately high sales tax rates with Tennessee, Indiana, Arkansas, and Georgia having a rate of 7.0%, 7.0%, 6.5%, and 6.6% respectively.
  • Alabama stands out with a modest 2.0% rate, followed closely by Colorado with a 2.9% sales tax rate.
  • For buyers in the Mid-Atlantic region, New Jersey offers a comparatively lower rate of 6.6%, while nearby states like Maryland and West Virginia have a standard 6.0% sales tax for cars.

States with the Highest Car Sales Tax

Leading the list is Kansas which imposes a relatively steep car sales tax of 7.5%. California comes in second with a sales tax of 7.3%. Following closely are Indiana, Rhode Island, Tennessee, and Utah, each levying a car sales tax of 7.0%. Circling in the seventh place is Nevada with a sales tax of 6.9%, while Washington's car owners face a tax burden of 6.8%, marking it eighth highest. Lastly, car buyers in New Jersey and Georgia need to account for a car sales tax of 6.6%, ranking them ninth and tenth respectively among the states with the highest car sales tax.

States with the Highest Car Sales Tax:

  1. Kansas - 7.5%
  2. California - 7.3%
  3. Indiana - 7.0%
  4. Rhode Island -  7.0%
  5. Tennessee - 7.0%
  6. Utah - 7.0%
  7. Nevada - 6.9%
  8. Washington - 6.8%
  9. New Jersey - 6.6%
  10. Georgia - 6.6% 

States with the Lowest Car Sales Tax

Topping this list are the five states that levy no car sales tax at all: Oregon, New Hampshire, Montana, Delaware, and Alaska. Buyers in these states can avoid a hefty addition to their car purchase costs, as they enjoy a 0% sales tax rate. Beyond these tax-free states, Alabama offers the lowest car sales tax rate among states that do impose this particular tax with 2%. In Colorado buyers can expect a relatively lower dent to their pockets courtesy of Colorado's 2.9% sales tax rate. In North Carolina, a 3% sales tax rate applies to car purchases. Similarly, Oklahoma maintains a 3.3% sales tax rate on car purchases. Lastly, Wyoming rounds off the list with a 4% car sales tax rate, still offering a more economical tax structure compared to the high taxation states. 

States with the Lowest Car Sales Tax:

  1. Oregon - 0.0%
  2. New Hampshire - 0.0%
  3. Montana - 0.0%
  4. Delaware - 0.0%
  5. Alaska - 0.0%
  6. Alabama - 2.0%
  7. Colorado - 2.9%
  8. North Carolina - 3.0%
  9. Oklahoma - 3.3%
  10. Wyoming - 4.0%

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