Paying Sales Tax on a Used Car Bought out of State

by Bob Haring, Demand Media

    Buying a car in one state and registering it in another can be a complex situation. Even if you bought the car in another state several years ago and paid sales tax there, you may have to pay some tax in your new state. Some states won't charge sales tax on a used car bought out of state but will impose "use" or "excise" taxes.

    Pay Where You Buy

    In most cases, you pay sales tax on the car in the state in which you bought it, but not always. If you live in New Jersey and buy a car in New York, for instance, you won't pay New York sales tax. Some states require you to present proof of sales tax payment in another state. Some states demand you pay sales tax in the state where you live and apply for a refund from the state of purchase. Others collect a tax of some sort on any car.

    Pay When Register

    You'll confront the tax issue when you register your car for the first time in the state where you live. You'll have to provide a bill of sale or other proof of ownership; a title from another state usually will suffice. In such states as Washington and Oklahoma, you'll pay a use or excise tax based on the value of the car when you register it for the first time, regardless of where you bought it.

    Other Variations

    If you're a Texas resident and buy a car out of state, you'll pay a sales tax when you register it. In California, you'll pay a use fee on any vehicle brought in from out of state, whether it's a used car you just bought or one you're bringing in when you move. Some states, like Georgia, allow out-of-state car dealers to collect and pay the sales tax, but that's usually restricted to neighboring states.

    Ask Before You Buy

    In many states, sales taxes vary by city and county, because local governments impose those taxes in addition to anything the state collects. The only way to know for sure what your sales tax will be on a used car you buy in another state is to ask ahead of time. If you buy the car in a neighboring state, the dealer should know the rules. Otherwise, consult the motor vehicle department in the state where you live before you buy.

    About the Author

    Bob Haring has been a news writer and editor for more than 50 years, mostly with the Associated Press and then as executive editor of the Tulsa, Okla. "World." Since retiring he has written freelance stories and a weekly computer security column. Haring holds a Bachelor of Journalism from the University of Missouri.