How Much Used Car Tax Should the Buyer Expect?

January 27, 2012

Used car tax can add significantly to the price of a used vehicle. So, you will need to know how to accurately estimate the amount of the Department of Revenue or DMV used car tax associated with a particular vehicle. Knowing about how much will be required to pay in state taxes will also help you plan for a used car tax deduction on your federal tax return - if you use your car for business or work.

Choose a Vehicle
Before you begin calculating how much tax you will pay on a used vehicle, you'll need to select a vehicle for purchase. So, begin by selecting makes and models of vehicles that may interest you so that you can begin comparing prices.

Search for the Best Price
Search at local dealerships in your area as well as visit car shopping sites online to compare prices for the particular make and model you're interested in.

Calculate State Sales or Use Tax
If you purchase a used vehicle from the dealership, you'll be required to pay state sales tax (if your state collects a sales tax). On the other hand, if you purchase your vehicle from a private party or from an online site where the vehicle is located out of state, you will generally be required to pay use tax. The rate for both state and use tax is usually the same as they are essentially the same type of tax.

In order to calculate the amount of sales or use tax you will have to pay, you first need to know your state's sales tax rate. This is usually pretty easy to find out as you can usually ask a cashier at any store you frequent or quickly find it online.

Once you have the tax rates, you will simply multiply the sales price of the vehicle times the percentage rate for state sales or use tax. This will give you the amount of sales or use tax you can expect to pay.

Calculate Title Transfer Fees
Contact your local DMV and ask how much title transfer fees are. In most states, these fees range from about $15 up to about $50 for the transfer of the title.

Calculate Registration and Licensing Fees
Registration and licensing fees will probably be the most difficult to calculate. In fact, you'll probably need to contact your state Department of Motor Vehicles and ask them how much registration and licensing fees for a particular make and model vehicle will be (You may be able to this online). Once you have this figure, jot it down for future reference.

Total the Amounts
Add up all the amounts. The final amount will be the total amount of state tax you should expect to pay on the used car.

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