Owning a vehicle is expensive from the day you purchase it until the day you quit driving it. In addition to paying cash for the car or paying monthly payments, you have to worry about gas, insurance, maintenance, and repairs. Before you even drive your car off the lot, though, you often have to pay multiple fees, including sales tax.
Sales tax is charged on car purchases in most states in the U.S. While you may be used to paying sales ta for most of your purchases, the bill for sales tax on a vehicle can be shocking. If, for example, you pay a 10% sales tax on $20,000, that’s an additional $2,000 you must spend – not counting doc fees and DMV fees.
Some states are more lax on their minimum sales tax requirements, and a handful don’t charge sales tax at all. Let’s explore the different sales tax rates for cars around the nation.
As previously mentioned, there are a few states that do not charge sales tax on cars. These states are Delaware, Montana, New Hampshire, and Oregon.
There are even fewer states that have minimum sales tax rates below 5%. Those states are North Carolina, which has a minimum tax rate of 3%, and Hawaii, which has a sales tax rate of 4.5%.