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All about New York Car Sales Tax for New and Old Cars

  • Auto Insurance
  • Natasha Young
  • 7 minutes

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If you want to buy a new or used car in New York, you should be aware of the New York car sales tax. Sounds like tedious research? Well, we have made it easy for you! Read to know more. 

new york used car sales tax

How much is New York’s sales tax on cars? 

All car sales in New York, whether new or old, are subject to a 4% sales tax. However, depending on the city or county where you buy, you may be charged an additional up to 4.5% sales tax on top of the 4%. If you buy a car in the state, you could face a maximum sales tax of 8.5%.  

In addition, in New York, car sales may be subject to additional fees such as registration, title, and plate fees. It should be no surprise that New York City has the highest possible car sales tax rate of 8.88%. 

Can you exclude the New York car sales tax? 

In short, yes!

On a general note, all car sales are subject to sales tax. Some individuals and corporations, however, can request sales tax exemptions by filing New York DMV Form DTF-803. Exemptions from car sales tax may be available in the following cases: 

  • You are an active member of the United States armed forces but do not live in New York and acquired the car out of state. 
  • You were not a New York resident when you purchased the vehicle. 
  • You obtained the automobile (but did not buy it) as part of an estate settlement. 
  • You intend to use the vehicle largely for farm chores. 
  • The automobile is given to you as a gift or purchased by a family member. 

We strongly advise you to visit the New York DMV website for further information about sales tax exemption. You know, just to be legally sound. 

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How to calculate New York car sales tax? 

You can use the official sales tax calculator tool from the New York State Department of Taxation and Finance. You might be asked to enter your zip code to calculate the sales tax according to your location. Then, you should calculate the received sales tax percentage by the vehicle’s price to estimate how much you’ll pay for your New York car sales tax. On a similar point, you should examine the following to get an accurate computation of your car sales tax: 

  • Manufacturer discounts 
  • Manufacturer or dealership cash incentives 
  • Whether the vehicle is sold for less than its fair market value. 

Other states regard dealer or manufacturer rebates and incentives as discounts rather than part of the selling price. Therefore, they are not subject to sales tax. As a result, your sales tax will be computed after any rebates or incentives are deducted because only the amount you spent out of pocket is taxed. In New York, however, you must still pay the sales tax amount before deducting the rebates and cash incentives from the purchase price. Meanwhile, if you purchased an automobile for less than fair market value, you must complete a DTF-802 form detailing the sales transaction. 

Do car sales taxes in New York apply to trade-ins and rebates? 

Many dealerships will accept your old vehicle in exchange for a credit toward the purchase price of a new vehicle. For example, you may trade in your old automobile and obtain a $15,000 credit toward the purchase price of a new vehicle worth $20,000, reducing your out-of-pocket expense to $5,000. 

Because your trade-in value is not subject to sales tax in New York, the taxable price of your new vehicle will be $5,000. This means you’ll avoid paying sales taxes on the $5,000 value of your trade-in. 

Many dealers give financial incentives or manufacturer rebates on the sticker price of a vehicle. For example, if a $2,000 cash refund is offered on a $12,000 car, the buyer’s out-of-pocket expenditure is $10,000. In New York, automobile purchases are taxed before rebates or incentives affect the price. Thus, the buyer will pay taxes on the vehicle as if it costs the full $12,000. 

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What other extra fees should you consider? 

In addition to the sales tax, other expenses may be considered when acquiring a new or used car in New York. Additional fees such as title and registration, documentation, and plate transfer must be factored in. The following are the costs that may be incurred while acquiring a new or used car in New York: 

  • Registration fees range from $32.50 to $140 on average. 
  • Title charges, which are around $50. 
  • Plate transfer charges are usually about $10. 
  • Documentation charges about $75. 

Factors influencing New York’s used car tax 

Certain factors influence the taxes you pay when purchasing a used car in New York. Such as: 

Dealer or dealership  

If you purchase a used car from a relative, such as a parent or stepparent, kid or stepchild, sibling or spouse, you will be excluded from paying sales tax. The seller, however, might not be a registered auto dealer. Also, if you buy your vehicle from a relative or another individual, you must file a DTF-802 Form. 

If your dealer includes sales tax when you buy your vehicle, you won’t have to pay it again when you register it. However, you must pay the difference upon registration if it was not included in the purchase price. 

Available rebates or incentives 

You can get credit for the value of your old automobile if you trade it in at a dealership for another used car. You can also take advantage of any manufacturer or dealership rebates. When you utilize your credit or cash rebates toward purchasing a car, you pay fewer taxes because the total purchase price is cheaper. This is because the state of New York only taxes what you pay out of pocket. 

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Purchase location 

If you live in New York but buy a car in another state, you may be required to pay sales taxes in that state. And when you register your car in New York, you must produce documentation that you paid those taxes in order to claim a credit against the amount you owe. However, if the state from which you purchased your vehicle does not have a sales tax agreement with New York, you may be unable to claim the credit. So be cautious about that. 

Your legal status 

If you were not a New York resident when you purchased a used car, you might be free from the state’s sales tax. In this situation, you must complete and submit Form DTF-803 to exercise your non-resident sales tax exemption rights. 

Car’s fair market value 

The used car’s fair market value you buy may influence the amount of sales tax you pay. This is because the DMV calculates sales tax using fair vehicle appraisals. 

If you acquire the car for less than its fair market value, you may be entitled to receive a rebate or refund for the difference in sales tax. As a result, you must ensure that the seller’s affidavit section of the DTF-802 is completed and signed. 

When purchasing a secondhand car in New York, you should be cautious about how much sales tax you spend. Make sure you don’t withhold any money you owe to avoid getting into legal trouble and having to pay interest. At the same time, exercise caution to avoid paying more than necessary. 

Why is the car sales tax in New York so high? 

New York has one of the nation’s highest car sales taxes, substantially higher than other states. Thanks to the political situations and revenue requirements of New York. Some states, such as Alaska, Delaware, Montana, New Hampshire, and Oregon, do not even charge sales tax on new or used cars. Still, Maryland, North Carolina, Iowa, and South Dakota offer exemptions. 

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