The Tennessee state sales tax on an automobile is 7 percent of the purchase price less the value of a trade-in. Tax rates differ by county. For instance, the Knox County sales tax is 2.25 percent of the first $1,600 of the sale price. For purchases in excess of $1,600, the sales tax is 2.75 percent.
Sales Tax
Tennessee imposes a sales tax of 7 percent of the purchase price of the automobile less the total value of the trade-in. For instance, the sales tax on a vehicle with a sales price of $10,000 with a buyer trade-in worth $2,000 is ($10,000 - $2,000) x 0.07 = $560.
Local Tax
Depending on the county in which you live, an additional local sales tax is applied to the purchase price of the automobile. Knox County assesses a 2.25 percent sales tax on the first $1,600 of the price of the vehicle, but no more than $36. If the purchase price of the vehicle exceeds $1,600, the local sales tax is 2.75 percent, not to exceed $44.
Fees
Besides state and local taxes, you also pay fees for purchasing an automobile. Knox County charges a title fee of $11 and a $24 license plate fee. A wheel tax of $36 brings the fees to $71. Other fees charged in Knox County include a transfer or existing plate fee of $14.50 and a $2 mail-in registration fee.
Insight
Before purchasing a vehicle in Tennessee, understand the local state tax rates to properly budget your car purchase. Understand that the purchase price, local sales tax rates, and miscellaneous fees such as registration fees will increase the cost of owning the vehicle.
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