When buying a used car in Arkansas, forewarned is forearmed when it comes to the state’s vehicle sales tax.
The Arkansas car sales tax rate is 6.5% of the vehicle's purchase price. In addition, you may be required to pay local taxes.
Keep reading to get the scoop on how vehicles are taxed in Arkansas.
Do you Pay Taxes When you Purchase a Car From a Private Party in Arkansas?
When making a car purchase in Arkansas, you’ll pay 6.5% of the vehicle’s purchase price, whether you’re buying from a private seller or a car dealer. Arkansas tax law does not discriminate between the two. Unless you qualify for a sales tax exemption (discussed below), you have to pay tax on your vehicle purchase.
In addition to the 6.5% Arkansas state sales tax on car purchases, local governments (cities and counties) often charge additional sales taxes and fees.
Local Arkansas Sales Taxes
Most Arkansas regional governments charge their own sales tax.
How Local Vehicle Sales Tax Works In Arkansas
Many Arkansas counties charge local sales taxes. Some Arkansas municipalities also charge local sales tax.
Depending on where you live in Arkansas, you could end up paying from 0% to 4.125% local sales tax on top of the state’s 6.5%.
Monroe County doesn't charge sales tax—it's the only Arkansas county with a 0% tax rate—but some of its municipalities, such as Clarendon, charge as much as 4%.
See a complete list of all Arkansas municipality and county tax rates on this official resource. Or, enter your address here, and the Arkansas Department of Finance and Administration (DFA) will tell you what your combined tax rate is.
Arkansas Local Sales Tax Example
You're in Sevier County and you find a stunning Ford Raptor for $20,000. To simplify things, let’s say you’re not in any of the county municipalities that charge sales tax, so all you owe is the combined county plus state tax.
Sevier County’s sales tax is 3.125%. This means you'll owe $625 in county tax ($20,000 multiplied by .03125). Add the local tax to the state sales tax due of $1300 ($20,000 multiplied by .065) and you owe a total tax bill of $1,925 on that spiffy new Raptor.
What is the Difference Between Sales and Use Tax?
Sales tax is a percentage of a car's purchase price owed to the state of Arkansas when you buy a car and register it in Arkansas.
Use taxes are pretty much the same thing, but for buying out-of-state vehicles. When you buy a vehicle out-of-state and register it in Arkansas, the state levies a 6.5% use tax. Depending on where in Arkansas the car is registered, you may have to pay local use tax as well. The use tax ensures that vehicles purchased within the state and cars brought into the state are taxed identically.
Use tax is based on the fair market value (FMV) of the vehicle rather than the purchase price. In most cases, the FMV and purchase price should be close—unless you get a screaming deal.
If you paid sales tax on the purchase of a vehicle in another state, Arkansas deducts that tax so that you are not taxed twice. There are four potential scenarios (we’re excluding local sales tax for the sake of simplicity).
- You paid exactly 6.5% sales tax in Kansas (the only other state with the same tax rate as Arkansas), in which case Arkansas will give you a pass.
- You paid no sales tax in another state, in which case you owe the full 6.5% Arkansas sales tax. Let's say you bought a used car in Delaware and didn’t pay sales tax, given Delaware’s 0% tax rate. You’ll pay Arkansas’s full 6.5% sales tax.
- You paid less than 6.5% sales tax in another state, in which case Arkansas charges you the difference. Imagine you bought a used car in Oklahoma with a FMV of $20,000. Oklahoma car sales tax rates are 4.5%, so you paid $900 (.045 X $20,000) in Oklahoma tax. When you go to register your car in Arkansas, your total tax bill will be $1300 minus the $900 you already paid in Oklahoma, for a total tax due of $400 to Arkansas.
- You paid more than 6.5% in the other state (for example, Tennessee levies a 7% tax on every used vehicle purchase). We wish we could tell you Arkansas will give you a refund, but no. At least they won’t charge you any more tax.
Arkansas License Plates, Title And Registration Fees
In addition to the state sales tax, you may owe other fees when buying a car and registering it in Arkansas, such as a car title fee and registration fee.
To register your vehicle at the Arkansas Department of Motor Vehicles (DMV) branch office, you must show proof of car insurance. The first time you register a passenger vehicle, you will need to transfer the title, which will cost you $10.
For passenger vehicles, Arkansas uses a complex sliding scale for registration.
The Arkansas standard license plate fee is included in the registration fee. A personalized plate costs an additional $25.
For the full scoop on Arkansas license plate and vehicle registration costs, see the Arkansas DMV page.
How is Used Car Sales Tax Calculated in Arkansas ?
Arkansas vehicle tax is calculated as a percentage of the vehicle's purchase price. Some people think they can outsmart the state by negotiating a low "official" purchase price and paying the rest in a side transaction. But the Arkansas Department of Finance and Administration can’t be fooled so easily.
If the DFA suspects that the purchase price of the vehicle was artificially decreased, they will calculate sales tax based on the car’s fair market value or book value.
The DFA establishes what the car is worth on the open market by referring to Kelley Blue Book, NADA value, or other reliable sources on used car prices. If they conclude that the car's fair market value is greater than its purchase price, they can opt to base sales tax on the fair market value.
It is important to note that underreporting the purchase price of a motor vehicle in order to avoid paying sales tax is illegal.
How to Pay Arkansas Vehicle Sales Tax
After buying a car from a private seller, you will pay the sales tax. Here is how to do it:
- To transfer ownership of the vehicle, you and the seller must complete the necessary paperwork, including the bill of sale (when you buy a used car on PrivateAuto, we provide an official Arkansas bill of sale and prompt both of you to sign it in our app at the appropriate stage of the transaction process). You'll need the following documents to transfer car ownership in a private transaction:
- The original car title.
- Proof of valid vehicle insurance.
- Valid driver’s licenses or IDs
- Calculate the amount of sales tax due. Multiply the vehicle's purchase price by 6.5%.
- Fill out the sales tax form.
- Submit payment for all taxes and fees.
- Get payment proof from the Arkansas DFA.
- Get your registration, title, and new license plates. Once you've paid the sales tax and turned in the necessary documentation, you'll get your new registration and title for the car. The title and registration will show that you bought the car and that the sales tax has been paid. You will get your new license plates in mail.
If you buy a used car from a private seller,it is recommended that both you and the seller go to a Department of Motor Vehicles branch to finish the transaction, which protects both of you.
How to Avoid Paying Sales Tax on Cars in Arkansas ?
Taxes are something you just can't avoid—they are a part of our lives. You are required by law to pay tax on private used vehicle purchases in Arkansas or any other state that charges sales tax—unless you meet an exemption in Arkansas.
Arkansas Car Sales Tax Exemptions
Only vehicles that were purchased at a cost of 4,000 dollars or less are exempt from sales tax.
Is Purchasing a Car from a Dealer Better?
A lot of people mistakenly believe that buying a car from an Arkansas dealer saves money. The opposite is true.
- Dealerships charge documentation fees above and beyond all the other taxes and fees you have to pay (the other taxes and fees are exactly the same whether you buy from a dealer or a private seller, by the way). An average documentation fee in Arkansas is $110.
- Used car dealerships typically charge higher prices. Their business model is based on buying low and selling high to generate the spread that keeps them in business. To get the best deals, skip the middleman and go directly to private sellers.
We do admit that dealers bring a certain amount of convenience that you don’t traditionally get when you buy from a private seller. In fact, that’s why we exist. PrivateAuto gives you dealer-like convenience in the palm of your hand while allowing you to transact peer-to-peer with regular folks like yourself.
By shopping for a used car on PrivateAuto, you avoid the doc fee and get lower prices by purchasing directly from private-party sellers.
Arkansas Sales Tax Calculator
If you're in the market for a used vehicle, you'll want to calculate the applicable sales tax. With PrivateAuto's used car sales tax calculator, calculating sales tax has never been easier. This free online car sales tax calculator calculates the amount of tax you must pay on a used car purchase based on your tax rate (6.5%) and the vehicle's price.
Our innovative platform connects buyers and sellers and gives them all the tools to complete the deal, from in-app financing to secure messaging to integrated payments via our banking gateway, PrivateAuto Pay. You can also schedule a test drive and negotiate the price without ever disclosing your personal information.
Here are 10 easy steps to selling your car in Arkansas.
- Gather the required paperwork for selling a vehicle in Arkansas
- Register on PrivateAuto and get verified
- List your car
- Set your terms
- Vet incoming offers
- Choose a buyer
- Schedule a meeting
- E-sign documents
- Get paid, instantly
- Transfer title
Arkansas Sales Tax FAQ
Which state has the cheapest car tax?
The states with the cheapest car tax are Alaska, Delaware, Montana, New Hampshire, and Oregon, with a tax rate of zero. Nevada has no taxes on private-party car sales, though it does have them for dealership purchases.
If you really want to avoid car sales tax, you might consider moving to one of these states.
With the exception of the above states, all US states charge sales tax on private-party vehicle purchases. There are some states, such as Oklahoma, North Carolina, Colorado, and Alabama, that charge 4.5% or less.
How do I calculate the sales tax on used cars in Lincoln County?
To calculate the vehicle sales tax in Lincoln County (or any county in Arkansas), follow these steps.
- Calculate Arkansas sales tax due (6.5% of your vehicle price)
- Calculate your county’s sales tax due (2% in Lincoln County)
- Add the two together for the total tax rate. You will pay 8.5% in sales tax.
When is the 2023 sales tax holiday?
According to the DFA, “Beginning at 12:01 a.m. on Saturday, August 5, 2023, and ending at 11:59 p.m. on Sunday, August 6, 2023, the State of Arkansas will hold its sales tax holiday, allowing shoppers the opportunity to purchase certain electronic items, school supplies, school art supplies, school instructional materials, and clothing free of state and local sales or use tax.”
How do I transfer a vehicle title in Arkansas?
To transfer an Arkansas vehicle title, you will need to submit the following to your local DMV office:
- A completed bill of sale/odometer disclosure statement (Form 10-313)
- A complete vehicle registration application (Form 10-381)
- Payment for title fees: $10
- Payment for any additional DMV fees
If you need a more in depth explanation, read our Arkansas title transfer guide.
How can I find a used car for sale near me?
From hybrid vehicles to special edition Dodge Demons, PrivateAuto is the best place to buy a used vehicle.
Here is how you can find your dream car in just a few simple steps:
- Browse used vehicles for sale on PrivateAuto.
- Look at the top of the page for the "Filter by Location" button. There, you will enter your location.
- Set a search radius, such as 25, 50, or 100 miles.
- You can make your search even more specific by choosing more filters, such as the year, the price range, the trim, etc.
- When you click "Search," a list of all the vehicles that match your search criteria will appear.