Indiana Vehicle Sales Tax & Fees

Indiana Car Sales Tax

It’s exciting to buy a new (or new for you) car, but it’s also far from cheap.

Things like sales tax and other fees are often forgotten about in the excitement of making a new car purchase. But in Indiana, you’ll need to be prepared to spend additional money on these extra costs.

Here’s what to expect when it comes to taxes and fees in the state of Indiana.

How Much Is the Car Sales Tax in Indiana?

How Much Is Indiana Sales Tax

The state sales tax on a car purchase in Indiana is 7%. Therefore, you will be required to pay an additional 7% on top of the purchase price of the vehicle.

Indiana is one of the few states that does not have any additional local or county sales tax.

So you can expect to pay 7% no matter where you buy your car in Indiana.

How to Calculate Indiana Sales Tax on a Car

You can calculate the sales tax in Indiana by multiplying the final purchase price by .07%.

For example, let’s say that you want to purchase a new car for $30,000, you would use the following formula to calculate the sales tax:

$30,000 x .07= $2,100

This means that your sales tax is $2,100 on a $30,000 purchase price.

Calculate Car Sales Tax in Indiana Example:

  • Initial Car Price: $30,000
  • Sales Tax Rate: 7%
  • Trade-In Amount: $5,000
  • Manufacturer Rebate: $2,000
  • Dealer Rebate: $3,000

Sales Tax = ($30,000 - $5,000 - $3,000) * .07
Sales Tax = $1,540

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.

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

Yes, in Indiana you must pay the car sales tax on a used vehicle. The sales tax rules remain the same whether the car is new or used.

Still, purchasing a used car is a wise choice for many. The overall price will be lower, which means you will pay less in sales tax than with a new vehicle.

Which County Has the Highest Tax? Which Has the Lowest?

All counties in Indiana have the same sales tax rate of 7%.

Car Sales Tax for Trade-Ins in Indiana

Trade In IndianaYou don’t have to pay sales tax on trade-ins in Indiana. In other words, be sure to subtract the trade-in amount from the car price before calculating sales tax.

As an example, let’s say you are purchasing a new SUV for $35,000 and your trade-in is worth $10,000. You will subtract the trade-in value by the purchase price and get $25,000. Therefore, your car sales tax will be based on the $25,000 amount.

Car Sales Tax on Private Sales in Indiana

A sales tax is required on all private vehicle sales in Indiana. It is the same 7% you would pay at a dealership, but you are responsible for paying the BMV when registering the vehicle.

Tax on Rebates & Dealer Incentives

Dealer Incentive Indiana

You do not have to pay tax on dealer rebates in Indiana. In other words, be sure to subtract the dealer rebate amount from the car price before calculating sales tax.

As an example, if you are purchasing a new car for $30,000 with a $5,000 rebate, you will pay sales tax on the $25,000 cost of the car.

However, the same does not apply to manufacturer rebates in Indiana. You must pay tax on manufacturer rebates, or in other words, do not subtract the manufacturer rebate amount from the car price when calculating sales tax.

Indiana BMV/State Fees

There are some other state and BMV fees associated with the purchase of a vehicle in Indiana.

A few of these fees include:

  • Registration Fee: $21.35/year
  • Title Fee: $15
  • Plate Transfer Fee: $9.50
  • EV Supplemental Fee: $50
  • Hybrid Supplemental Fee: $50

Indiana Dealership Fees

Dealerships apply extra fees, sometimes referred to as “doc fees,” with the sale of the car.

Though these fees vary based on the dealership, the average fee in Indiana is $150, with no statewide limit on how much dealerships can charge.

When Sales Tax Is Exempt in Indiana

Indiana Tax Exemptions

Much like every state, Indiana has some sales tax exemptions for vehicle sales. Exemptions include:

  • You receive the vehicle as a gift from a spouse, parent, child, grandparent, or grandchild.
  • You receive the vehicle in a divorce.
  • If you inherited the vehicle.
  • You receive the vehicle from an individual’s revocable trust.

Indiana EV Rebates & Incentives

You can receive a $1,650 incentive if you have a charger at your residence. These state rebates and incentives are on top of the $7,500 Federal EV rebate.

 

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

Frequently Asked Questions

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

The sales tax on a car purchased in Indiana is 7%. There is no additional local or county tax in Indiana.

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

There is a 7% sales tax on used vehicles, which is the same rate for new cars in Indiana.

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

You will not have to pay sales tax if the vehicle is gifted to you from a spouse, parent, child, grandparent, or grandchild.

How much is registration in Indiana?

  • Registration Fee: $21.35/year
  • Title Fee: $15
  • Plate Transfer Fee: $9.50
  • EV Supplemental Fee: $50
  • Hybrid Supplemental Fee: $50

Does a trade-in reduce sales tax in Indiana?

A trade-in will reduce your overall sales tax. For instance, if you purchase a new SUV for $55,000 and your trade-in is valued at $15,000, then you will only have to pay tax on the $40,000.

How can I avoid paying sales tax in Indiana?

The following events are not taxable when it comes to vehicle transfers:

  • If you inherited the vehicle.
  • You receive the vehicle from an individual’s revocable trust.
  • You receive the vehicle as a gift from a spouse, parent, child, grandparent, or grandchild.
  • You receive the vehicle in a divorce.