How to Figure Sales Tax on Vehicles

Sales tax is part of the expense of buying a car. Figuring the sales tax on an automobile purchase can be drastically different among states. But a basic formula can be used to calculate the amount of the sales tax on your next vehicle purchase.

Instructions

1. Contact a local motor-vehicle office to determine the current sales-tax rate.

2. Find out what the rate is in the location where you are buying the car. Most jurisdictions apply city or county taxes to a vehicle purchase.

3. Find out whether your state offers a trade-in tax credit. Most states do. If you have a trade-in, you may be required to pay sales tax only on the net sales price after deducting the amount you received for trade-in--called the taxable value.

4. Determine if your state taxes manufacturer's rebates. Most states do not tax rebates, but a few do. If you are buying a new car, this can make a substantial difference.

5. Multiply the total tax rate, the combination of state and local taxes, by the sale price or the taxable value of your purchase. If your total tax rate is 9.5 percent, for example, and the sale price is $12,000, you would pay $1,140 in sales tax.

Tips & Warnings

• Always contact the motor-vehicle department in your city or county for current tax information. Many tax-rates listed in Internet tables are outdated.

References

• Rebate tax credit in New Jersey

Resources

• State-by-state motor-vehicle department websites