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February 16, 2022
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.
Are you looking to purchase a vehicle in North Carolina?
Then you will want to know about the state sales tax rate that you may need to pay. Because of this potential expense, many people want to know if tax exemptions or if buying a car out of state can help.
Here is a look at everything that you need to know about state sales tax in North Carolina.
North Carolina technically doesn't collect a sales tax on vehicle purchases, but there is a 3% highway-use tax that is calculated whenever a title is transferred.
To calculate the sales tax on your vehicle, find the total sales tax fee for the city and/or county. In North Carolina, it will always be at 3%. Multiply the vehicle price (after any trade-ins but before incentives) by the sales tax fee.
For example, imagine you are purchasing a vehicle for $30,000 with a highway-use tax of 3%. You trade-in a vehicle for $8,000 and get an incentive for $2,000. Maryland does not charge tax on trade-ins but does on rebates, so you would pay tax on the $22,000.
In this example, multiply $22,000 by .03 to get $660, which makes the total purchase price, $20,660 (account for the incentive).
Calculate North Carolina Sales Tax Example
- Initial Car Price: $30,000
- Highway-Use Tax: 3%
- Trade-In Amount: $8,000
- Rebate/Incentive Amount: $2,000
Sales Tax = ($30,000 - $8,000) * .03
Sales Tax = $660
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.
You will have to pay the 3% highway use tax on the purchase of a used car in North Carolina.
Alamance, Caswell, Chatham, Durham, Orange, and Person counties have the highest tax rates of 7.5%.
Avery, Brunswick, Camden, Chowan, Columbus, Currituck, Dare, Davie, Gates, Hyde, Mitchell, Pamlico, Tyrrell, Vance, and Washington counties have the lowest total tax rate of 6.75%.
However, for all vehicle sales, North Carolina charges a flat 3% highway-use tax.
You do not have to pay a sale tax on the trade-in on your vehicle in the state of North Carolina.
In other words, when calculating sales tax, be sure to use subtract the trade-in value from the initial car price before calculating sales tax.
Let’s say that you're purchasing a new car for $45,000 and your trade-in is valued at $15,000. You would pay sales tax only on the $30,000.
You will have to pay the 3% highway use tax to the North Carolina Department of Motor Vehicles.
As an example, if you purchase a truck for $30,000 from a private party, then you will have to pay a $900 highway use tax.
The state of North Carolina does tax rebates and dealer incentives. In other words, be sure to use the full purchase price when calculating sales tax.
As an example, let’s say you want to purchase a new SUV for $40,000 and the dealer provides a $1,000 rebate. The taxable amount is still $40,000.
The following DMV fees apply for vehicles in North Carolina:
The average dealership fee in North Carolina is $550, and there is no statewide limit on how much this fee can be. This is known as the document or "doc fees".
These are the fees paid to handle the state paperwork when dealing with a vehicle sale. Usually, you will not be able to negotiate this fee. However, other dealers fees such as advertising and transport fees can be negotiated.
A highway use tax can be exempt for the following reasons:
There are no EV rebates or incentives for the purchase of EV vehicles in North Carolina. However, there is a federal rebate of up to $7,500 on EV vehicles.
There are some additional perks like HOV lane access and exemption from emissions inspection requirements.
Tax information and rates are subject to change, please be sure to verify with your local DMV.
The state sales tax or highway use tax rate is 3%. As an example, if you purchase a new truck for $60,000, then you will have to pay $1,800 in taxes.
There is a 3% highway use tax on used vehicle sales in North Carolina. As an example, if you purchase a used truck for $20,000, then you will have to pay an additional $600 in highway use tax.
All vehicle sales in North Carolina are subject to a 3% highway use tax.
Yes. Gifted vehicles are subject to a 3% highway use tax unless the title is transferred in a will.
The annual registration of a vehicle is based on its weight:
Yes, a trade-in reduces the highway use tax. As an example, if you purchase a car for $50,000 and the trade-in is worth $15,000, then you will pay the highway use tax based on the $35,000 difference.
You can avoid paying the highway use tax in the following situations:
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