How is sales tax calculated on a new car

Posted on: March 19th, 2014 by Glenn

How is sales tax calculated on a new car varies from state to state, city to city and county to county.  States like Alaska, Montana, New Hampshire, Delaware and Oregon do not charge sales taxes.  Each state has its own way of determining a car’s taxable price.


1) The car sales tax will vary based on the state and the total purchase price of the car. You can refer to your local finance department website to understand the sales tax rate for your state.


2) Deduct dealer financing fees, manufacturer’s discounts, warranty payments and any other processing fees.  These are the ones that you don’t need to pay the taxes.


3) Itemize all the expenses including any transfer fees.


4) Add all those expenses for which you have to pay the tax — the title transfer, insurance and new license plate processing fees.


5) In order to obtain the sales tax  fee, multiply the sales tax rate percentage by the price of your new car.



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