Tennessee (TN) Vehicle Sales Tax & Fees [+ Calculator]
If you’re excited to buy your new car in Tennessee, we’re excited for you! Tough news though; you will need to pay sales tax on it.
Things like sales tax and other fees are often forgotten about in the excitement of making a new car purchase. But in Tennessee, 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 Tennessee.
Understanding Tennesee Car Sales Tax Video
How Much Is the Car Sales Tax in Tennessee?
The state sales tax on a car purchase in Tennesee is 7%. Therefore, you will be required to pay an additional 7% on top of the purchase price of the vehicle.
However, this does not include any potential local or county taxes. The average local tax rate in Tennessee is 2.614%, which brings the total average rate to 9.614%.
As an example, if you were to purchase a new truck at a purchase price of $50,000, then you will have to pay an additional $3,500 in sales tax.
How to Calculate Tennessee Tax on a Car
You can calculate the sales tax in Tennessee by multiplying the final purchase price by .07%.
For example, let’s say that you want to purchase a new car for $60,000, you would use the following formula to calculate the sales tax:
$60,000 x.07 = $4,200.
This means that your sales tax is $4,200 on a $60,000 purchase price.
Calculate Car Sales Tax in Tennessee Example:
- Initial Car Price: $60,000
- Sales Tax Rate: 7%
- Trade-In Amount: $5,000
- Incentives/Rebates: $2,000
Sales Tax = ($60,000 – $5,000) * .07
Sales Tax = $3,850
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.
Tennessee Sales Tax Calculator
Do I Have to Pay Sales Tax on a Used Car?
The sales tax is the same 7% on a used vehicle.
For example, if you were to purchase a used car for $30,000, then you will have to pay an additional $2,100 in sales tax.
Which County Has the Highest Tax? Which Has the Lowest?
The city with the highest car sales tax in Tennessee is Memphis, with rates of 9.75%.
The city with the lowest car sales tax is Mountain City with a car sales tax rate of 8.5%.
Car Sales Tax for Trade-Ins in Tennessee
You don’t have to pay sales tax on trade-ins. 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 $40,000 and your trade-in is worth $15,000. 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 Tennessee
A sales tax is required on all private vehicle sales in Tennessee.
As an example, if you purchase a truck from a private party for $15,000, then you will pay 7% of that amount to the Tennessee DMV.
Tax on Rebates & Dealer Incentives
You do have to pay tax on dealer rebates and incentives. In other words, do not subtract the incentive/rebate amount from the car price before calculating sales tax.
As an example, if you are purchasing a new car for $50,000 with a $5,000 rebate, you will pay sales tax on the full $50,000 final cost of the car.
Tennessee DMV & State Fees
In addition to sales tax, you will have to pay associated fees to the DMV and the state.
The Tennessee DMV charges the following fees:
- Registration: $26.50
- Electric Vehicle Registration: Additional $100
- License Plate Title: $95
- Title Fee: $11
- Title Transfer Fee: $1
- License Plate: $21.50
Tennessee Dealership Fees
On top of state and DMV fees, car dealerships can charge additional fees for filing paperwork and the costs associated with purchasing the car.
There are no regulations on how much dealerships in Tennessee can charge in dealership fees, but the typical buyer pays an average of $495.
When Sales Tax Is Exempt in Tennessee
Tennessee does offer quite a few exemptions when it comes to sales tax on cars, including the following:
- Sales to members of the armed forces
- Sales or transfers between spouses or siblings, parents, grandparents, children, and grandchildren
- Sales to nonresidents of Tennessee who plan to leave the state with the vehicle within three days of buying it
- Sales to nonprofit organizations or government entities only for organizational or governmental use
- Any vehicles given as gifts
- Vehicles transferred personally from a sole proprietor’s business to the sole proprietor
- Vehicles converted by an individual for use at their sole proprietor business
- Vehicles owned by two individuals who get the vehicle’s title issued in only one of their names
- Vehicles given as a gift in which the giver receives no benefit
- Vehicles given to a Tennessee qualified nonprofit
- Vehicles given to the federal government, the state of Tennessee, a Tennessee county or municipality, or an agency of these governments
Tennessee EV Rebates & Incentives
Tennessee currently does not offer financial incentives to those purchasing an electric plug-in or hybrid vehicle.
However, they do offer Middle Tennessee Electric (MTE) and Chattanooga’s Electric Power Board offer a $50 bill credit to residential members who install Level 2 charging outlets in their garages
This is in addition to the $7,500 rebate offered by the federal government.
Tax information and rates are subject to change; please be sure to verify with your local DMV.
