Buying a Car in Another State: Which Sales Tax Do You Pay?
Found a better deal across the state line? You can usually buy there, but the tax follows you home. Here's which state's tax applies, how to avoid paying twice, and the steps to register the car.
Which state's sales tax do you pay?
In general, you pay the tax of the state where you register the car, which is normally where you live. States call it a sales tax, a use tax or a title tax, and they collect it when you title the car, wherever you bought it.
Some dealers collect your home state's tax for you and handle the paperwork; others charge their own state's tax, or none, and leave you to pay at home. Ask the dealer which one they'll do before you sign.
Will you pay tax twice?
Usually not. Many states give credit for sales tax you already paid to another state, so you pay only the difference if your home rate is higher. If you paid more than your home state charges, you generally don't get the extra back.
Credit rules differ from state to state, and a few give little or none. Keep the bill of sale and a receipt showing the tax you paid, and check with your home DMV or revenue department first.
Does buying in a no-sales-tax state save money?
Not if you live somewhere else. Alaska, Montana, Nevada and New Hampshire charge no state sales tax on the purchase, but your home state still collects its own tax when you register the car there.
The real savings come from the vehicle price, not the tax. Compare deals on the full out-the-door price using your home state's tax with the out-the-door price calculator, and see how states compare in our car tax rankings.
Steps to buy a car out of state
- Check your home state's tax on the car with its state calculator.
- Ask the dealer whether they'll collect your home state's tax or none at all.
- Get insurance and a temporary tag or transit permit to drive it home.
- Keep the bill of sale, title and any tax receipt.
- Title and register the car in your home state before its deadline, and pay any tax still due.
Moving to a new state with a car you own?
That's different from buying out of state. When you move, many states charge new residents a flat fee or give credit for tax you already paid, instead of the full sales tax. Our calculators include a new-resident rule for Colorado, Connecticut, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Minnesota, Missouri, New Mexico, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, West Virginia and Wisconsin; open your new state's page for the details.
Frequently asked questions
Do you pay sales tax where you buy a car or where you register it?
Generally where you register it. Your home state charges its sales or use tax when you title and register the car there, even if you bought it somewhere else.
Will I pay sales tax twice if I buy a car out of state?
Usually not. Many states give credit for sales tax you already paid to another state, so you pay only any difference. Keep the bill of sale and proof of the tax you paid, and check the rule with your home state before you buy.
Can I avoid sales tax by buying a car in a state with no sales tax?
No, not if you live elsewhere. Buying in Alaska, Montana, Nevada, New Hampshire doesn't remove your home state's tax; you pay it when you register the car at home.
How do I drive a car home from another state?
Ask the dealer or the state's DMV about a temporary tag or transit permit, and arrange insurance before you drive. You then title and register the car in your home state within its deadline.