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Alabama car sales tax at a glance
| Alabama | |
|---|---|
| Tax | automotive sales tax (state 2% automotive rate) |
| State rate | 2% |
| Counties and cities add tax | Yes |
| Trade-in lowers the tax | Yes, tax is on the price minus the trade |
| Leases | Tax on each monthly payment |
Checked on the state's official sources on 2026-11-02. Rates change; the state's revenue department has the last word.
How to work out Alabama sales tax on a car
Multiply the taxable price by the rate. In Alabama the trade-in comes off first.
A $30,000 car with a $5,000 trade: $25,000 x 2% = $500 at the state rate, plus any county or city tax where you register the car.
State automotive rate is 2% (Ala. Code 40-23-2(4)), not the 4% general rate; most cities and counties add their own automotive sales tax.
Trade-ins
Tax is levied on the net difference after a trade-in (Admin. Rule 810-6-1-.22); a trade-in larger than the price gives no extra deduction.
Leasing a car in Alabama
Tax on each monthly payment. Alabama: the lessor owes 1.5% state lease (rental) tax on gross lease proceeds, normally collected on each monthly payment; local lease taxes may add, and a trade-in applied to a lease is taxable (no trade-in credit). The lease calculator uses Alabama's method when you pick the state.
Dealer doc fees
No state cap found.