Do You Pay Sales Tax on Used Cars in Texas if You Have a Trade In?

March 18, 2013

When purchasing a pre-owned vehicle, you will need to pay a used car sales tax in Texas. Many states calculate the amount of tax to be paid based on the purchase price of the vehicle. In some states, the value of a trade in does not affect this calculation. In the state of Texas, though, the value of the trade in is subtracted from the purchase price. The tax is based on the result. In other words, if you purchase a $10,000 car and you have a trade in that is valued at $3,000, you pay tax on $7,000, not $10,000.

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