How to Estimate Car Taxes

Considering that some counties in the United States charge more than 8 percent sales tax on vehicle sales, it is a good idea to figure out your sales tax before making such a large purchase. If buying a car privately, you can expect to pay your state taxes when registering your vehicle, but if buying from a dealership, you'll pay your taxes during the transaction. Learn how to find your state and county's sales tax rate and how to apply it.

Instructions

1

Call your state's motor vehicle office to find out your exact sales tax amount. Have your ZIP code handy to give to the motor vehicle representative in case your state charges different tax amounts by county.

2

Ask the representative if you can deduct a trade-in amount from the sales price of the vehicle before applying tax. If you have a trade-in, you have already paid taxes on it and most states allow you to deduct its trade value for a tax savings. If buying a new car, ask the representative if you can deduct discounts and manufacturer rebates before applying tax---some states require you to pay tax on the full MSRP (manufacturer's suggested retail price) while others consider a price discount, but not manufacturer cash allowances (which look like money down, not a discount).

3

Take the selling price of your vehicle and deduct applicable discounts allowed in your state. This includes subtracting a trade-in amount, if applicable, and new car discounts or rebates, if allowed in your state.

4

Multiply the adjusted selling price by your tax rate. If your calculator does not offer a percentage symbol, use a decimal instead. For example, a $15,000 vehicle with a 8.25 percent tax rate would be multiplied as "15,000 X .0825."

5

Use an auto loan calculator, if you prefer. The Edmunds' website's auto loan calculator offers one free to use that puts in your tax rate by default depending on the ZIP code you enter.