Arizona (AZ) Car Sales Tax & Fees [+ Calculator]

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Michael Collado

Michael Collado

Michael Collado is a car buying expert and has been a professional automotive writer since 2009.  He’s written about dealership sales, vehicle reviews and comparisons, and service and maintenance for over 100 national automotive dealerships.  Previously, Collado was a copywriter at the ad agency TBWA/Chiat/Day where he worked on brand campaigns for Nissan, ABC Television, Sony PlayStation, and Energizer. His recognition in the ad industry includes awards from Communication Arts and The Clios.

Collado has a Bachelor’s degree from the University of South Florida, with a major in Psychology and a minor in Marketing.

Navigating Arizona's vehicle sales tax can feel overwhelming, but we're here to guide you through, making it as smooth as possible.

Whether it's a brand new ride or a pre-loved car, understanding Arizona's sales tax is crucial. Many ask if there's a way around it, especially when considering out-of-state purchases or how to avoid car sales tax.

Let's look at what you need to know about Arizona's sales tax on vehicles, aiming to save you stress and money.

Understanding Car Sales Tax in Arizona Video

How Much Is the Car Sales Tax in Arizona?

The current statewide sales tax in Arizona is 5.6%.

However, there may be an extra local or county sales tax added to the base 5.6% state tax. Local tax rates range from 0% to 5.6%, with an average of 2.132%. The max combined sales tax you can expect to pay in Arizona is 11.2%.

How to Calculate Arizona Sales Tax on a Car

To calculate the sales tax on your vehicle, find the total sales tax fee for the city. The minimum is 5.6%. Multiply the vehicle price (after trade-in and/or incentives) by the sales tax fee.

For example, imagine you are purchasing a vehicle for $45,000 with a state sales tax of 5.6%. You trade in a vehicle for $5,000 and get an incentive for $2,000. Arizona does not charge tax on trade-in and rebates, so you would subtract $7,000 from the car cost to get $38,000, which is the taxable amount.

In this example, multiply $38,000 by .056 to get $2,128, which makes the total purchase price $40,128.

Calculate Car Sales Tax in Arizona Example:

• Initial Car Price: $45,000
• Sales Tax Rate: 5.6%
• Trade-In Amount: $5,000
• Rebate/Incentive Amount: $2,000

Sales Tax = ($45,000 - $5,000 - $2,000) * .056
Sales Tax = $2,128

Remember that the total amount you pay for a car (out the door price) not only includes sales tax, but also registration, and dealership fees.

Arizona Sales Tax Calculator

Do I Have to Pay Sales Tax on a Used Car?

Yes, the sales tax rule applies to the purchase of both new and used vehicles in the state of Arizona.

Which County in Arizona Has the Highest and LowestTax?

When you calculate the state and county tax, the counties with the highest total tax rates are Pinal County at 10.73% and Coconino County at 11.2%.

When accounting for both the state and the county tax rate, the counties with the lowest tax are Santa Cruz and Mohave County with a combined tax of 8.6%.

It's worth noting that many cities in Mohave County do not add on an extra local tax, so it uses the base 5.6%.

Car Sales Tax for Trade-Ins in Arizona

You do not have to pay a sale tax on the trade-in on your vehicle in the state of Arizona. In other words, when calculating sales tax, be sure to subtract the trade-in amount from the car price.

Let’s say that you're purchasing a new car for $40,000, and your trade-in is valued at $10,000. This would put your new vehicle purchase price at $30,000, which is the taxable amount.

Car Sales Tax on Private Sales in Arizona

There is no tax on private sales of vehicles in the state of Arizona.

As an example, let’s say that you would like to purchase a used vehicle for $16,000 from a private owner. This is known in Arizona as a “casual sale,” and it is not subject to a sales tax.

Here are a few benefits of purchasing from a private seller:

• Cost Savings: Purchasing from a private seller in Arizona means no sales tax and lower overall costs due to the absence of dealership fees, leading to significant financial savings​​.
• Transparency and Negotiation: Direct dealings with the seller allow for transparent transactions and personalized negotiation, often resulting in a better understanding of the vehicle’s history and a more favorable price​​.
• Avoid Additional Fees: Private sales avoid extra dealership charges, such as documentation fees, enhancing the purchase's affordability​​.

Tax on Rebates & Dealer Incentives

The state of Arizona does not tax rebates and dealer incentives. In other words, be sure to subtract the incentive amount from the car price before calculating the sales tax amount.

As an example, let’s say you want to purchase a new truck for $47,000, and the dealer provides a $2,500 rebate. You do not have to pay a sales tax on the $2,500 rebate. Therefore, the taxable amount is $44,500.

Arizona DMV & State Fees

Arizona charges the following DMV/State fees:

• Driver License Fees: $10 to $25 (Varies by Age)
• Motor Vehicle Record: $5
• New Automobile Annual Registration: $2.80 per $100 of assessed value.
• Used Automobile Annual Registration: $2.89 per $100 of assessed value.

Arizona Dealership Fees

Arizona dealerships charge the following fees:

• Doc Fees: ~$410. No Statewide Cap
• Advertising Fees: ~$500 (Varies)
• Transport Fee: $800-$1,700

Example of Total Vehicle Purchase Costs in Arizona

Below is an example of the total purchase costs for a vehicle in Arizona. It’s not a complete figure since we can’t account for each local county and city’s individual taxes. However, this will give you a ballpark of what you’ll be looking at when purchasing a $15,000 vehicle.

Vehicle Sales Tax Rates Comparison of AZ and Neighbors

Arizona residents must pay the applicable city and state use taxes when they register an out-of-state vehicle purchase at an MVD or Authorized Third Party office. Arizona offers a tax credit for taxes paid in another state when purchasing a vehicle.

If an Arizona resident buys a vehicle out of state and pays sales tax there, they can receive a credit against their Arizona state tax liability for the amount paid in the other state.

This policy prevents double taxation, meaning you won't have to pay full taxes in both states. For more information, check out the Arizona Department of Revenue’s Moter Vehicles Sales page.

When Sales Tax Is Exempt in Arizona

You can avoid paying sales tax on vehicle transactions in Arizona if you register your vehicle outside of the state. The purchaser has to provide proof that the vehicle is registered in another state in order to operate in Arizona. Learn more about the best states to buy a car.

If you are using the vehicle for a non-profit or religious institution, you may be exempt from paying sales tax.

Arizona EV Rebates & Incentives

Arizona may offer reduced tax rates to those who own an electric or alternative fuel vehicle.

Also, in addition to the federal tax incentives, Arizona utility companies offer reduced electricity rates when charging during off-peak hours.

These incentives are designed to make it more affordable to own and operate an electric vehicle in the state.

Tax information and rates are subject to change, please be sure to verify with your local DMV.

Conclusion

Understanding Arizona's vehicle sales tax and fees is the key to success for any savvy car buyer, from statewide to county-specific rates.

To stay updated with the latest insights and tips for your car purchase, including strategies to manage costs effectively, sign up for the FTBCP newsletter. Keep yourself informed and one step ahead in your car-buying journey.

Frequently Asked Questions

What is the sales tax on a car purchased in Arizona?

The state sales tax on a vehicle purchase in the state of Arizona is 5.6%. However, this amount does not include local county sales taxes. The average sales tax in Arizona is 7.732%.

Do I have to pay sales tax on a used car in Arizona?

Yes, you will have to pay sales tax on a used car that is purchased through a dealership.

Which county in Arizona has the lowest tax?

When accounting for both the state and the county tax rate, the county with the lowest tax is Santa Cruz County with a total 8.6% tax.

Which county in Arizona has the highest tax?

When you calculate the state and the county tax, the county with the highest total tax rate is Pinal County at 11.2%.

Do I have to pay sales tax on a gifted car in Arizona?

You do not have to pay tax on a gifted vehicle as long as the vehicle is indicated as a gift in Form REG 256.

How much is registration in Arizona?

Vehicle registration in Arizona is determined by the assessed value of the vehicle. The rate for new and used vehicles are as follows:

• New Automobile Annual Registration: $2.80 per $100 of assessed value
• Used Automobile Annual Registration: $2.89 per $100 of assessed value

Does a trade-in reduce sales tax in Arizona?

Yes. A trade-in value is not figured in the final taxable price of the vehicle. As an example. If you purchase a vehicle with an agreed-upon price of $40,000 and you have a trade-in vehicle valued at $8,000, then the final taxable price of the vehicle is going to be $32,000.

How can I avoid paying sales tax in Arizona?

You can reduce sales tax in Arizona by purchasing the vehicle in a county with a lower county sales tax. You can also consider purchasing the vehicle from a private owner. Finally, you can see if you can have the vehicle gifted to you.