How car sales tax works
- Most states charge their sales tax on a car at the dealer, and many let counties and cities add more, based on where you register it.
- In most states your trade-in comes off the price before tax. A few tax the full price.
- Rebates from the carmaker are taxed in some states and not others.
- Leases are usually taxed on each payment, but some states tax the price or all payments at signing.
Car sales tax by state
| State | State rate | Trade-in lowers tax | Leases |
|---|---|---|---|
| Alabama | 2% | Yes | Tax on each monthly payment |
| Alaska | None | n/a | No sales tax on leases |
| Arizona | 5.6% | Yes | Tax on each monthly payment |
| Arkansas | 6.5% | Yes | Its own rule (see leasing below) |
| California | 7.25% | No | Tax on each monthly payment |
| Colorado | 2.9% | Yes | Tax on each monthly payment |
| Connecticut | 6.35% | Yes | Tax on each monthly payment |
| Delaware | 5.25% | Yes | Tax on each monthly payment |
| District of Columbia | None | n/a | Its own rule (see leasing below) |
| Florida | 6% | Yes | Tax on each monthly payment |
| Georgia | 7% | Yes | Tax on all the payments, due at signing |
| Hawaii | 4% | No | Tax on each monthly payment |
| Idaho | 6% | Yes | Tax on each monthly payment |
| Illinois | 6.25% | Yes | Tax on all the payments, due at signing |
| Indiana | 7% | Yes | Tax on each monthly payment |
| Iowa | 5% | Yes | Tax on all the payments, due at signing |
| Kansas | 6.5% | Yes | Tax on each monthly payment |
| Kentucky | 6% | Yes | Its own rule (see leasing below) |
| Louisiana | 5% | Yes | Tax on each monthly payment |
| Maine | 5.5% | Yes | Tax on all the payments, due at signing |
| Maryland | 6.5% | Yes | Tax on the car's price, due at signing |
| Massachusetts | 6.25% | Yes | Tax on each monthly payment |
| Michigan | 6% | Partly | Tax on each monthly payment |
| Minnesota | 6.875% | Yes | Tax on all the payments, due at signing |
| Mississippi | 5% | Yes | Tax on each monthly payment |
| Missouri | 4.225% | Yes | Its own rule (see leasing below) |
| Montana | None | n/a | No sales tax on leases |
| Nebraska | 5.5% | Yes | Tax on each monthly payment |
| Nevada | 6.85% | Yes | Tax on each monthly payment |
| New Hampshire | None | n/a | No sales tax on leases |
| New Jersey | 6.625% | Yes | Tax on all the payments, due at signing |
| New Mexico | 4% | Yes | Tax on each monthly payment |
| New York | 4% | Yes | Tax on all the payments, due at signing |
| North Carolina | 3% | Yes | Its own rule (see leasing below) |
| North Dakota | 5% | Yes | Tax on all the payments, due at signing |
| Ohio | 5.75% | Partly | Tax on all the payments, due at signing |
| Oklahoma | 3.25% | No | Tax on the car's price, due at signing |
| Oregon | 0.5% | No | Tax on the car's price, due at signing |
| Pennsylvania | 6% | Yes | Tax on each monthly payment |
| Rhode Island | 7% | Yes | Tax on each monthly payment |
| South Carolina | 5% | Yes | Tax on the car's price, due at signing |
| South Dakota | 4% | Yes | Tax on all the payments, due at signing |
| Tennessee | 7% | Yes | Its own rule (see leasing below) |
| Texas | 6.25% | Yes | Its own rule (see leasing below) |
| Utah | 4.85% | Yes | Tax on each monthly payment |
| Vermont | 6% | Yes | Its own rule (see leasing below) |
| Virginia | 4.15% | No | Tax on the car's price, due at signing |
| Washington | 6.8% | Yes | Tax on each monthly payment |
| West Virginia | 6% | Yes | Tax on each monthly payment |
| Wisconsin | 5% | Yes | Tax on each monthly payment |
| Wyoming | 4% | Yes | Tax on each monthly payment |
State rates only; local taxes can add more. Checked 2026-11-02.