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Vehicle Sales Tax Questions

Kirstie_HKirstie_H Posts: 10,837
Based on recent conversations, it looks like we need a separate discussion to cover sales tax questions. Do you pay where you buy, or where you live? How can you calculate what you'll owe? Can you finance the tax? Let's post our questions and answers here.

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  • I am purchasing within the next two weeks either a Hyundai Santa Fe or Mitsubishi Outlander both the very most basic model.I will most likely purchase the vehicle in Phoenix AZ as the Hyundai dealer in Tucson would not take my interest in looking at a new vehicle seriously. Will deal via the internet or over the telephone. I live in Cochise County, about 140 miles from Phoenix. I have had one quote from a dealer which was $15,644 base price, $1,323.00 tax $299.00 Documents, and $342.38 Lic. After some corrections was told the out the door price was $17,529.07. Are those four items, base price, tax , documents, and licsense the total of costs that a resident of this county in this state will pay? I realise that it will have to be reregistered in one year. Am I overlooking anything?
  • Although I can't comment specifically on who lives where, what I can tell you is for YOU, the WHERE you buy it, in most cases, is irrelevant to where you LIVE.

    That is I live in Town A, WI and buy a car in Town B, WI, in a different county, 30 miles away. Doesn't matter. The tax I pay is based on where I live and where the car will be garaged.

    In most cases, that difference is only "Does my county have a sales tax and the county where I bought it does not"? This is NOT, really, a big issue to consider when buyer either vehicle, IMO.
  • volvomaxvolvomax Posts: 5,274
    In Arizona the sales tax is determined by where you buy the car.
    If you buy a car in Phoenix you pay 8.1 %, if you buy a car in Scottsdale you pay 7.95%.

    As far as the Hyundai is concerned, you'll pay the selling price, sales tax, license fees, and the doc fee. Thats it.
  • bobstbobst Posts: 1,783
    We live in Virginia, just across the border from Maryland.

    When we bought cars in Maryland, we paid sales tax to Virginia. That's how it works around here.
  • alfoxalfox Posts: 716
    a MA resident who buys a car anywhere and registers it in MA pays sales tax to MA - no matter who else you paid.
  • No matter who else you paid? Ouch?

    I live in Ohio (6.5%) and purchased in Indiana (6.0%). I paid 6.0% in Indiana at the time of purchase. When I went to get my Ohio Certificate of Title, I paid an additional .5% (6.5% due to Ohio, minus 6.0% credit as paid to Indiana, I think they call this reciprocity?).

    If the Indiana tax where 7.0%, I would have paid 7% to Indiana and owed no additional tax to Ohio (nor would I have received the extra 0.5% back).

    Cheers.
    Gtab
  • kyfdxkyfdx Posts: 27,921
    My guess is... that Indiana rebates that amount to Ohio..

    I bought my M-I-L, who lives in Indiana, a car in Ohio.. Paid $zero sales tax to Ohio.. They gave her a non-resident title, and she paid the tax in Indiana, where she lives..

    Without the rebate, I can't see Ohio letting Indiana keep that money...

    I know it doesn't work that way between Ohio and Kentucky.

    regards,
    kyfdx

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  • alfoxalfox Posts: 716
    have reciprocity where if a MA resident buys a car out of state they sell it without sales tax, and issue only a temp plate until you can get home and register in your home state. I had a car die in NY years ago and that's how it worked.

    If you move into MA from another state, and can show that you complied with that state's sales tax laws when you bought the car, they do not charge sales tax in MA. The laws are designed to prevent people from going to NH to buy a car, for example, to avoid MA sales tax.
  • robr2robr2 BostonPosts: 7,761
    Further since in New England it's pretty easy to cross borders to do anything, most dealers have the paperwork for the surrounding states. When I bought a car in NH, the dealer had all the MA forms ready to go. I moved my plate to the new car and had 48 hours to go to the Registry and pay my tax and transfer the plate.
  • kyfdxkyfdx Posts: 27,921
    Yes.. that is my understanding of reciprocity also... That the state allows you to buy the car WITHOUT paying sales tax, then you pay it in your home state..

    Sales tax in Kentucky used to be a LOT more than Ohio... And all the dealerships in KY near the state line would advertise: "If you do not live in Kentucky, you do not pay Kentucky sales tax".

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  • akanglakangl Posts: 3,592
    All this talk of sales tax and buying cars is making me VERY glad I live in Alaska. We don't have a state sales tax.........yet.
  • robr2robr2 BostonPosts: 7,761
    My understanding that it may happen soon.

    But don't some cities (all right the one city) and towns charge sales tax on some items?
  • akanglakangl Posts: 3,592
    Some do on certain items, so far cars haven't been taxed. It will happen eventually, its just one of those things, but for now we are enjoying NOT having a state sales tax or state income tax.
  • No provincial sales tax here in Alberta either....but we have the national GST of 7%. Better than Ontario I guess who pay a whopping 15%.
  • No matter where you buy a car, you owe the tax appropriate for where you live. (I sort of emphasize that because some counties in WI have no sales tax, some counties have there own tax and in the 5 SE WI counties, there is the county tax plus additional tax for Miller Park).

    So, if I buy a car in IL, I have to title/register it in WI, where I live. If (and I don't even know if they would do this) they tried to charge me sales and/or personal property tax--not sure if they have that in IL--then I would probably get that as a credit against tax owed to WI. You don't pay it to both places. IL has no legal right to the money, since you aren't a resident.
  • Unless it went up..........

    In NY sales tax just went to 8.25% in my area from 7%.

    Florida has no state income tax last I knew.....

    Funny tho in Fla.......You can claim a BK and still KEEP your personal home !
    Quite a few of the stock market swindlers bought multi millon dollar homes in Fla. for cash.
    Then filed BK and kept them and kept the $$$$ they stole!
  • You're absolutely right boomer, but if you add in the GST the total is 15%. Its a rough go lol
  • Thanks for the AZ specific information. If I did the numbers right the savings on the $15644.00 between Phoenix and Scottsdale sales tax amounts to $23.46.With Huyundai there are only the 4 items to consider,but do you know anything about how Mitsubishi operates? I have heard that some invoices have a line that would best translate as Dealer extra profit. That may have been a joke.
  • While you are correct in that you pay sales tax on vehicles for where you are a resident, it's not technically correct to state "IL has no legal right to the money, since you aren't a resident". In every other retail transaction the sales tax is paid, not according to residence, but in the jurisdiction where it is purchased. If I go to California and purchase from a California retailer (anything but an automobile) then sales tax is charged at the rate of location of purchase.

    I have never seen a good argument as to why a person's resident jurisdiction gets the sales tax of a transaction completed in another. Personal Property Tax/Ad Valoram yes, I understand, but the sales tax should go to the jurisdiction where the sale happens, as in all other transactions.
  • A person who files for Bankruptcy (7) is able to keep their primary residence in ALL states.

    Bankruptcy laws are both Federal and State. The Federal laws are the most liberal and and the filer has the choice to abide by Federal or State exemptions. The Federal exemptions are:

    $16,150 in equity which serves as a residence
    $2,575 on a motor vehicle
    $8,625 in household furnishings with no single item worth over $425.
    $1,075 in jewelry
    $850 plus up to 2 of the unused residence exemption in any property
    social security, support, unemployment benefits, welfare, VA disability and certain pension benefits.
  • alfoxalfox Posts: 716
    I don't think there is a good argument. These are just reciprocity agreements. The reason of course is money - sales tax on cars is such a significant revenue stream to a state that they cannot allow people to go out of state to avoid the tax. Since all states think the same way, it was easy to agree to reciprocity.
  • But in that same arguement, why would that matter? If I live on the border of a state that has no sales tax I can go there for all of my purchase, which easily, yearly, add up to more than a vehicle costs (and we don't buy new vehicles every year) and not pay taxes.

    I know WHY they did it but it's really a way for local (state) governments to engage in activities that are banned for normal businesses.

    Why I think the sales jurisdiction should get it? The jurisdiction that "houses" the retail establishment takes on the expense of the common features of the community in which people shop. Sales tax, going to the jurisdiction where the expenses/income are accrued, only makes sense, regardless of the fact that each states wants as much money as they can get.
  • alfoxalfox Posts: 716
    but the states revenue departments obviously don't, lol.

    We live next to a state with no sales tax, and MA is passing all kinds of laws trying to prevent people from shopping in NH. They have made it illegal to buy goods from an out of state source that are available in-state without paying MA the sales tax they lost. They are "encouraging " Internet retailers to report sales to MA residents, so that they can collect the sales tax. If you do buy on-line from, say, Dell Computer and fail to pay the sales tax to MA, and they find out about it they are prosecuting people for tax evasion. Hasn't been tested much yet, but that's their bizzare plan.
  • robr2robr2 BostonPosts: 7,761
    alfox - actually the MA tax is considered a sales and use tax. So if you buy out of state and use it in state it is subject to tax. I wouldn't be suprised to discover that's how it is in most states.

    Further, MA added last year to the state income tax return a place to list all purchases made outside the state that you owe the 5% on. If you put down zero when you made taxable purchases and then sign the return, you are technically guilty of tax fraud.
  • kyfdxkyfdx Posts: 27,921
    robr2 has it pegged exactly.. Most states have a "use tax" in addition to the sales tax.. By law, you have to pay a "use tax" on anything you purchase out of state...

    You can see how this would create chaos when it comes to sales taxes on cars.. Car dealers that border another state would never be able to sell a car to an out-of-state resident, if that resident then had to pay a use tax when he registered the car in his home state. Everyone would be driving to NH, OR, or FL to buy their cars otherwise..

    I think the system they have now is the best.. Pay the tax on cars where you live... It may be different, but it makes good fiscal sense.

    regards,
    kyfdx

    MODERATOR
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  • alfoxalfox Posts: 716
    a fast growing thread, top-10 for sure, lol.
  • Can someone help me in figuring out sales tax. Sales tax in NC is 3% I had a price for an Avalanche for $30000. When I went to the dealership, they changed the numbers to $30500 and then took the additional $500 off at the end. I had a trade valued at $6500. The dealership then applied the tax to the difference and then took the $4000 rebate after adding the tax to the difference. They then took the $500 dealer cash at the end. I seems to me that the tax should not have been applied until after the rebate. (30500-6500-4000). Am I wrong. I thought they were trying something so I got up and left.
  • Hi gsdavis. In most states customer cash incentives are taxable, while dealer cash incentives are not because they are considered manufacturers' price adjustments. So for example, sales tax would be calculated on the vehicle that you are considering before the $4,000 customer cash was deducted, but after the $500 dealer cash was. You should be able to find out more informaiton your state's specific tax laws by visiting the following Web sites: North Carolina Department of Revenue and North Carolina Division of Motor Vehicles.

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  • I live in NH, a state without sales tax, but I am thinking about moving to another state (don't know which state yet). I am also thinking about getting a new car relatively soon, and would like to do it here because of the tax situation. However, when I moved several years ago from NY to Kentucky, I had to show proof of a sales tax payment on my car that was equal to or greater than it would have been in KY (no problem, since I moved from a place with 8.25% to 6%). But, if I were to do that this time, I'd get socked with a huge use tax. Anyway, does anyone know what states do or do not have the "use tax" penalty for the cars of incoming residents? I'd hate to have an extra $1000 to pay right after spending big bucks on relocation.
    Steven
  • alfoxalfox Posts: 716
    primarily because of NH's tax situation. However, it would be taxed one-time at ~5% of current fair market value (as determined by them), so each model year of age based on when you registerred it in MA would reduce the sales tax.

    Note that the MA municipality you moved to would also charge you a personal property (excise) tax equal to about 2.5% of the fair market value (as determined by them)... each year, forever!
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