How to Calculate Taxes on an Automobile
When you buy a new or used car, the sticker price is not going to be the final amount that you will need to pay in order to own the automobile. You will need to calculate the taxes in order to determine the amount that you will need to pay before you can register the vehicle. Although some car dealers may roll the taxes into your car loan, you will still need to pay them back.
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Instructions
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Determine the rate of sales tax for your state. For instance, if you live in a state with a 6 percent imposed sales tax rate, you will need to pay 6 percent of the retail price of the vehicle and other related auto expenses.
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Find out the amounts that are not taxable. Warranties and other fees imposed by the car dealership are usually not taxable amounts.
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Ask the dealer to present you with a figure that represents the taxable amount that you will need to pay on the automobile. He will first subtract the non-taxable fees and warranty amounts. You can then multiply this amount by the tax percentage required by your state in order to figure out your automobile tax payment.
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Include taxes associated with other automobile expenses as well. Title transfers and license plates are set fees determined by your state's Department of Motor Vehicles.
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Consider factors that may affect the amount of tax that you pay on a car. If you purchase the car from a private seller, you may be charged by the state for tax on the estimated value of the vehicle even if you paid a lot less. Your state's treasury department may launch an inquiry if the amount of tax that you pay during registration does not match that associated with the Blue Book value of the car.
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Tips & Warnings
If you are a business with a sales tax certificate, you can look into getting auto taxes waived if you purchase the vehicle for the company. Currently, there are five states that do not charge sales tax. If you register the car in Montana, Alaska, Delaware, New Hampshire or Oregon, you will not have to pay sales tax on the vehicle.
