Yahoo Finance 10 States Where You Should Avoid Buying a Car Due to High Sales Tax
New and used cars are already expensive, but according to a recent GOBankingRates report, you need to consider a lot more than sticker price and monthly payments when leaving a dealership. Most buyers are aware of the expenses involved in car ownership, but many aren’t aware of just how much average annual insurance premiums, gas expenses and car maintenance and repair costs differ from state to state.
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Another expense that varies depending on where you live is car sales tax. Sales tax is due whenever you buy or register a vehicle, including purchasing from private parties and dealers (although some states give exemptions for vehicle transfers between close family members or relatives, per J.D. Power).
If you live in a state that charges no sales tax — the “NOMAD” states: New Hampshire, Oregon, Montana, Alaska and Delaware — you won’t be charged any car sales tax. Residents in Oklahoma, North Carolina, Colorado, and Alabama pay less than 3.5% in sales tax when they buy a car, and four other states (Hawaii, New Mexico, New York and South Dakota) charge a relatively small sales tax rate of 4%.
However, if you’re thinking of buying a car in a no-sales-tax state to save money, you can think again. No matter where you buy your car, you’ll need to pay taxes in the state in which you register it (although a dealership might collect the sales tax and give you a receipt, per Car and Driver).
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Here are the 10 states that have the most expensive sales tax for new and used vehicles (along with an in-depth breakdown of the Top 3), according to Policy Genius, and what you’ll pay based on the average car transaction amount of $48,510 in April 2024, as reported by KBB.
1. Nevada
State Car Sales Tax (%): 8.25%
State Car Sales Tax ($): $4,002.08
Nevada has the highest car sales tax in America. If you buy a car for the latest average transaction price of $48,510, you’ll end up paying an additional $4,002 in sales tax. Not only does the state boast the highest sales tax on cars, but it’s average price for fuel is high too. You’ll only pay more for buying and owning a vehicle for one year in one other state than Nevada, and that’s California.
2. Kansas
State Car Sales Tax (%): 7.50%
State Car Sales Tax ($): $3,638.25
It’s somewhat surprising to see Kansas in the #2 spot here, but it’s the perfect example of how much sales tax can add to the overall cost of owning a car. According to GoBankingRates data, Kansas ranks as the 10th most expensive states in which to own a car. Average insurance rates, gas prices and maintenance and repair costs are not significantly high or low compared to other states, but the vehicle sales tax rate of 7.50% helps inflates ownerships costs.
3. California
State Car Sales Tax (%): 7.25%
State Car Sales Tax ($): $3,516.98
We always figure that California has the highest price on, well, everything. While that’s not far from the truth, its car sales tax is the third priciest in the country, tied with Illinois at 7.25%. Unfortunately, the Golden State is the most expensive state to own a car. Insurance premiums and car repairs are also among the highest nationwide, and it’s always the leader in gas prices among the 50 states.
4. Illinois
State Car Sales Tax (%): 7.25%
State Car Sales Tax ($): $3,516.98
5. Indiana
State Car Sales Tax (%): 7.0%
State Car Sales Tax ($): $3,395.70
6. Rhode Island
State Car Sales Tax (%): 7.0%
State Car Sales Tax ($): $3,395.70
7. Tennessee
State Car Sales Tax (%): 7.0%
State Car Sales Tax ($): $3,395.70
8. Utah
State Car Sales Tax (%): 6.85%
State Car Sales Tax ($): $3,322.93
9. New Jersey
State Car Sales Tax (%): 6.63%
State Car Sales Tax ($): $3,216.21
10. Georgia
State Car Sales Tax (%): 6.60%
State Car Sales Tax ($): $3,201.66
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This article originally appeared on GOBankingRates.com: 10 States Where You Should Avoid Buying a Car Due to High Sales Tax
