Insurance/Finance

How much tax is paid for a car in the USA

How much tax is paid for a car in the USA

Knowing how much taxes are paid for a car in the USA is important when you buy a car, whether it is new or used. The reason? You must add this amount to your purchase budget, beyond the sale price.

Of course, the amounts of the taxes will always depend on the state where you decide to buy a car in the USA.

Each of the 50 states has its own legal system, so the amount of taxes and their rates can vary depending on where you live.

In addition to knowing how much a car pays in taxes in the United States depending on the state where it is purchased, you should also know how much you will pay for the title;

registration , insurance and other costs when the vehicle is acquired through a loan.

To clear your doubts, we have prepared this article for you in which we will tell you how much taxes are paid for a car in the USA and all the expenses that you must assume when buying a car.

In this way, you will have a broader notion of the investment you will make.

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How much tax is paid for a car in the USA?

If you want to buy a car, you should consider the outlay you will have to make to pay taxes and cover other expenses related to the transaction. We detail them below.

Sales and personal property taxes

The purchase of a car in the United States is subject to sales tax and personal property tax.

The first tax applies when we buy or rent a product or service. At the end of the article you will find a table with the maximum rates of this tax in each state.

Meanwhile, the payment of the personal property tax is calculated by multiplying the real value of the property by the tax rate.

Also known as the mileage rate, the tax rate represents one thousandth of a dollar or a mile.

Fee for title registration

For a car to be in your name you must pay a registration fee. The amount varies depending on the formula used in the state where you live to calculate the taxes.

In states like New York , Florida or California , they base the rate on factors such as the value, weight or year of the car.

While in North Carolina, for example, they work with a standard rate for vehicular processing.

Take into account that this procedure must be carried out the first 30 days after completing the procedure to buy a car.

If you register a vehicle outside of that period, you expose yourself to penalties from the Department of Motor Vehicles ( DMV ).

Fee for transfer of title

When you buy a used car, you must pay the fees for transferring the title . This document certifies who owns the vehicle. The procedure must be done at the DMV.

Now, to find out how much the DMV charges for change of ownership , it is best to check the rates by state, as they vary in each one of them.

Title Loan Endorsement Fee

If you plan to purchase a vehicle through auto loans from banking institutions, credit unions, or with a loan provided by the dealer itself, then the DMV will issue an additional fee for endorsing the title lien.

The enrollment

Among the costs of buying a car you must include the amount for issuing the license plate.

Each state may have different requirements for issuing new plates and specific regulations on the proper use of plates.

There are states where you can transfer the plates from an old vehicle to a new one.

Meanwhile, in places like California digital plates with Kindle and Pocket technology are already used, whose cost is around $699.

It is necessary to consider the regulations on the number of plates that the vehicle must carry. Some states allow only the rear license plate, while others like Texas require both plates.

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Dealer fee

If you are going to buy a car at a dealer in the USA and you receive financing from the dealer itself, you will have to pay interest and the processing, which usually includes registration and registration.

For these cases, it is best to review the detailed charges to be billed and clarify doubts with the seller before closing the deal .

You also need to research the rate limit in your state to prevent the dealership from billing more than that.

Other fees

States may apply additional fees for conducting vehicle emissions inspection tests. These inspections are basic requirements to travel on the roads.

Likewise, electric or hybrid vehicles pay additional taxes , since they do not pay taxes on gasoline consumption .

Insurance

To travel on the road in the United States it is mandatory to have auto insurance . But don’t worry, there is cheap car insurance , whose prices vary depending on different factors such as:

the age of the driver, the state where he will drive and even the number of traffic tickets received by the applicant.

The most convenient thing is to request several quotes and take into account the best car insurance to choose the one that best suits your needs and budget.

How to calculate the taxes of a car?

Although the final amount of taxes for the purchase of a vehicle depends on a wide variety of factors, we will show you some examples of what you could pay for sales taxes;

registration and car title, based on a new car valued at $17,000.

Discover below the average prices for these taxes in the states of Virginia , California , Florida and Texas.

How much tax is paid for a car in Virginia?

The maximum sales tax in the state of Virginia is 7%. To calculate the amount of the payment we must multiply the price of the vehicle by that percentage.

Doing the calculation with a new car valued at $17,000, the amount to pay for taxes would be $1,190, as a result of multiplying $17,000 x 7% (0.07).

On the other hand, the Virginia Department of Motor Vehicles has a title and registration fee of approximately $53.

If we add the two taxes, you would pay:

$1,190 (sales tax) + Average DMV fee ($53)= $1,243

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How much tax is paid for a car in California?

In the state of California the maximum sales tax is 10.25%. Continuing with the example of a new $17,000 vehicle, we would then pay: $17,000 x 10.25% (0.1025)= $1,742.5.

For title and registration fees, the California DMV charges a fee of approximately $296.

When making the sum between both taxes, you would pay:

$1,742.5 (sales tax) + Median DMV Fee ($296) = $2,038.5 for these two taxes in the State of California.

How much tax is paid for a car in Florida?

If you live in Florida you will have to pay a sales tax for the purchase of your car of 8%. In this state, if the price of the car is $17,000, then it would be: $17,000 x 8% (0.08) = $1,360.

To this amount we must add the fee charged by the Florida DMV for title and registration, which is approximately $302.

When making the sum between both taxes, you would pay:
$1,360 (sales tax) + Median DMV Fee ($302) = $1,662 for these two taxes in the state of Florida.

Sales tax rate by state

Condition Maximum sales tax (% )
Alabama 11.00
Alaska 7.50
Arizona 11.20
Arkansas 11.25
California 10.25
Colorado 11.20
Connecticut 6.35
Delaware 0.00
D.C. 5.75
Florida 8.00
Georgia 8.90
Hawaii 4.50
Idaho 9.00
Illinois 11.00
Indiana 7.00
Iowa 7.00
Kansas 10.60
Louisiana 11.45
Maine 5.50
Maryland 6.00
Massachusetts 6.25
Michigan 6.00
Minnesota 8.38
Mississippi 8.00
Missouri 10.10
Mountain 0.00
Nebraska 7.50
Nevada 8.27
New Hampshire 0.00
New Jersey 6.63
New Mexico 9.06
New York 8.88
North Carolina 3.00
North Dakota 8.50
0hio 8.00
Oklahoma 11.50
Oregon 0.00
Pennsylvania 7.00
Rhode Island 7.00
South Carolina 9.00
South Dakota 6.50
Tennessee 10.00
Texas 6.25
Utah 8.60
Vermont 7.00
Virginia 7.00
Washington 10.40
West Virginia 7.00
Wisconsin 5.50
Wyoming 6.00

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