How to Figure Out the Tax, Title & Tags for a Used Car

Determine Your Fees

1.

Contact your local Department of Motor Vehicles (DMV). Ask what the vehicle sales tax is in your county and write the number down. Ask if your situation applies to this tax--whether this vehicle is a normal sale purchase or if it is a transfer from a family member, inheritance or gift. The latter has its own rules that are determined only by the DMV.

2.

Ask your local DMV what the title and tag fees are in your area. Tell the representative if you plan to purchase privately, in which case you have to do all of your transactions at the DMV, or if you plan to transfer plates or get new ones. Your fees remain the same for a dealer. Write all fees down.

3.

Ask your DMV or dealer representative, if buying from a dealer, if your trade-in is tax deductible, if applicable. Ask if you pay tax on MSRP (manufacturer's suggested retail price) before incentives or rebates, or after, if purchasing a brand new car. Note all of this information to do your math.

Figure Your Price

1.

Start with your sales price to figure out tax. If purchasing a brand new car, subtract the incentives or rebates if your state allows the vehicle to be taxed on this price. If not, start with the MSRP or negotiated starting price. Start with the selling price of the car if it is used.

2.

Deduct your trade-in amount from the starting price if buying from a dealer. Start your figures from this price if you have a trade-in situation--you cannot be taxed on the same vehicle twice, as you paid taxes on your original vehicle.

3.

Multiply the price your taxable price by the interest rate. Use a calculator. Input the starting price and multiply it by the rate by either entering the rate as a percentage if your calculator allows, or as a decimal. Convert the percentage into a decimal by inputting the decimal followed by the tax rate, which should like this: ".07" for seven-percent, ".075" for 7.5-percent or ".0335" for 3.35-percent.

4.

Take your result, which is the tax amount, and add it to the sales price. Deduct any incentives or rebates for a new car if you determined that you are taxed on MSRP instead and add the fees you noted from the DMV for your title and tags..

Tips and Warnings

  • You can use the Internet to determine your taxes and fees by checking your states DMV website or a calculating website (see Resources).
  • If you're buying a brand-new vehicle, dealers have extra fees beyond DMV fees. Be sure to ask.
  • You cannot determine fees in a state like North Carolina, which charges you depending on your property taxes and DMV determined value of your vehicle (it doesn't matter what your cost is). You must contact the DMV with your address and vehicle information.
  • Gifted, inherited and transferred vehicle are also a special scenario--contact your local DMV.
  • Vehicle tax differs greatly not only by state, but by residing county. Fees differ by state. Both fees and tax differ if you receive the vehicle as a gift or as a transfer from a family member. Some states figure tax based on property taxes, like North Carolina. For this reason, you must contact your Department of Motor Vehicles to determine correct fees.