Are you planning to purchase a car in Arkansas? It’s important to understand that the sticker price of the vehicle is not the only factor to consider. Sales tax is a significant supplemental expense that varies depending on where you buy your car. Therefore, it’s crucial to know how much Arkansas car sales tax costs before making a purchase.
It’s important to note that Arkansas has one of the highest car sales taxes in the United States. However, the sales tax rate varies from state to state. On a positive note, residents of the state can now breathe a sigh of relief as the sales tax rate for trailers, used cars, and semi-trailers priced between $4,000 and $10,000 has decreased to 3.5% starting from January 2022.
Are you wondering how much tax you need to pay on a used car in Arkansas? Read on to learn everything you need to know about Arkansas car sales tax and if you can avoid paying it.
How much is the sales tax on a car in Arkansas?
All car sales in the state include a tax rate of 6.5 percent. An extra 5% is taken as municipal and county taxes. The average car sales tax comes to around 9.133%.
With a rate of 6.5%, the state ranks tenth among the states with the highest car sales tax rates. The rate remains the same whether you buy a new or used car. County and local sales taxes will also add to the tax rate. With a rate of 11.5%, Lincoln County ranks the highest among the counties in the state.
With a total tax rate of 7%, Carroll County has the lowest one!
How do you calculate sales tax on a car in Arkansas?
Find the city’s overall sales tax rate as a starting point for your car’s sales tax calculation. For instance, the rate in the state is 6.5%. Then, add the sales tax fee to the car’s price (before incentives and after trade-ins).
Imagine buying a car for around $25,000 with a tax rate of 6.5%. Your car is worth $5,000 as a trade-in, and you also receive a $2,000 incentive. Trade-ins are not taxed, but incentives and rebates are; therefore, the total taxable amount is $20,000. Then, multiply $20,000 by 0.065 to get $1,300, which is the tax rate. So, the total cost of your car will be $19,300.
- Initial car cost = $25,000
- Sales tax rate = 6.5%
- Trade-in cost = $5,000
- Incentive = $2,000
- Arkansas new car sales tax = ($25,000-$5,000) * 0.065 = $1,300
Visit the Department of Finance and Administration website to calculate Arkansas car sales tax!
What are the exemptions on car sales tax in Arkansas?
Though most car purchases require sales tax in the state, there are a few exemptions. You can submit a claim form on the DFA Tax Credits/Special Refunds page to request a car sales tax exemption. In addition, you can apply for an exemption if you meet any of these conditions.
- You are a disabled veteran who obtained financial help from the Department of Veterans Affairs to buy the car.
- You bought the car to transport the elderly, crippled, or mentally ill, who are part of a Department of Human Services (HHS) program or a nonprofit organization.
- The car’s price is below $4,000.
Do I have to pay sales tax on a used car in Arkansas?
Yes. Used cars priced below $4,000 aren’t subject to state sales tax. However, used cars priced above $4,000 will have a tax rate of 6.5%.
How do I avoid paying sales tax on a used car in Arkansas?
You can avoid paying sales tax on car transactions if you buy a used car in Arkansas for less than $4,000.
How much is the sales tax on a car in Benton County, Arkansas?
Localities in Benton County are subject to a 1% countywide sales tax rate in addition to the 6.5% Arkansas sales tax rate.
Do I have to pay sales tax on my car when I move to Arkansas?
Purchases of both new and old cars require you to pay sales tax in the state. This tax is payable at the time of car registration, not at the time of purchase. For information on any applicable sales tax rates, taxpayers should contact their local county or city government.
Can you pay sales tax on a car with a credit card in Arkansas?
No. The best way is to pay by check or to use cash with the right receipt provider.
Can you pay sales tax on a car online in Arkansas?
Yes. If you choose to pay online, or by visiting the Department of Finance and Administration website.
Which counties have the lowest and highest car sales tax in Arkansas?
With a tax rate of 7%, Carroll County has the lowest rate. Lincoln County has the highest tax rate, with 11.5%.
What additional costs will you incur while buying a car in Arkansas?
The cost of buying a car doesn’t end with sales tax alone. Additionally, remember that most dealerships charge documentation fees, title and registration fees, and expenses for changing your license plate. The following are some additional rates you will incur while buying a car.
| Cost type | Average rate |
| Sales tax | 9.133% |
| Registration | $17-$30 |
| Title | $10 |
| Plate transfer | $1 |
| Documentation fee | up to $129 |
Gerard Stevens is an experienced writer specializing in travel and car ownership in the U.S. With over five years in this field, he strives to simplify travel and driving for his readers. Gerard offers valuable guidance on various topics, including car and travel guides, helping his audience feel more confident in navigating these challenges.
