What’s the Car Sales Tax in Each State? (Updated for 2025)

When purchasing a car, many buyers often overlook a significant expense: sales tax.

At FindTheBestCarPrice, our seasoned editors leverage their extensive experience across different states to provide you with precise calculations of vehicle sales tax for each state.

Consider how an 8% sales tax on a $15,000 car can unexpectedly increase your total cost by $1,200, excluding additional fees like those for the DMV, documentation, and registration.

With sales tax varying significantly by state, and some states not imposing one at all, it’s crucial to grasp these details.

Let’s explore the sales tax for car purchases in each state, equipping you with the knowledge needed to navigate this aspect of car buying.

Car Sales Tax by State

In the table below, we show the car sales tax rate for each state.

States with No Sales Tax

Some states do not charge any sales tax on cars. The states with no car sales tax include:

• Alaska
• Delaware
• Montana
• New Hampshire
• Oregon

States with Low Sales Tax On Cars

Next up are the states that have minimum sales tax rates below 5%. The minimum sales tax states are:

• Alabama – 2%
• Colorado – 2.9%
• Hawaii – 4%
• Lousiana – 4%
• Missouri – 4.23%
• New Mexico – 4%
• New York – 4%
• North Carolina – 3%
• Oklahoma – 4.5%
• South Dakota – 4%
• Virginia – 4.15%

Several U.S. states offer relatively low sales tax rates for vehicles, making them potentially more affordable. Alabama and Colorado notably stand out with the lowest rates.

States like Hawaii, Louisiana, New Mexico, New York, and South Dakota are close behind with only a 4% tax.

North Carolina and Oklahoma set their rates slightly lower, while Missouri and Virginia have slightly unique rates, neither reaching as high as 4.25%.

However, it’s important to note that local taxes can also apply and could raise the overall tax rate, making it crucial to check local rates before finalizing a vehicle purchase.

States with High Sales Tax

The remaining states have the highest sales tax, all 7% or above. The high sales tax states are:

• California – 7.25%
• Indiana – 7%
• Kansas – 7.5%
• Rhode Island – 7%
• Tennessee – 7%

How Is Sales Tax Calculated on a Car Lease?

You must pay sales tax when you lease a car. In most states, you pay sales tax on the monthly lease payment, not on the car’s full price.

Sales tax on a leased vehicle depends on the state’s tax rate and the lease payment amount.

Imagine that your monthly lease payment is $500, and your state’s sales tax on a leased car is 6%. For a $500 monthly lease payment at 6% sales tax, you must pay $30 in sales tax each month.

Therefore, your total monthly lease payment, including sales tax, would be $530.

Can I Save Money on Sales Tax by Buying a Car in a Different State?

If you live just across the border from a state with little or no sales tax, it might be tempting to buy your car out of state to save money on sales tax. While there are other reasons to consider buying a car out of state, you will not save money on sales tax by buying a car in a state with low or no sales tax.

You must pay the sales tax for the state you will register your car in, which is the state you live in. 

However, there are a few legal ways to avoid paying sales tax on a car.

Check out which states are the best to buy a car in.

Can I Get a Sales Tax Credit for my Trade-in?

In many states, you can get a sales tax credit based on the value of your trade-in.  Depending on the amount of your appraisal, you may be able to get more money trading to the dealership than selling your car on your own.

We’ve created a calculator that will tell you the tax credit amount and help you determine whether it’s better to trade-in to the dealership or to sell your car privately.

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