The tax is 5.5% of your vehicle's purchase price. On top of that, you may owe local taxes as well. And then there are the fees.
Keep reading to get the full scoop on Nebraska motor vehicle sales taxes and fees.
Do you Pay Taxes When you Purchase a Car From a Private Party in Nebraska?
When making a car purchase in Nebraska, you’ll pay sales tax, whether you buy from a private seller or a car dealer. Nebraska sales tax law does not discriminate between the two. Unless you qualify for a tax exemption (discussed below), you have to pay tax on your vehicle purchase.
In addition to the 5.5% state tax, you may owe local sales taxes on your vehicle purchase.
How Local Vehicle Sales Tax Works In Nebraska
Many Nebraska municipalities and counties charge local sales taxes.
Depending on where you live in Nebraska, you could end up paying from 1% to 2% local sales tax on top of the state’s 7.50%.
See a complete list of all Nebraska city and county sales tax rates on this official resource.
Nebraska Local Sales Tax Example
You're in Alma, and you find a stunning Toyota Tacoma for $30,000.
Alma’s sales tax is 2%. This means you'll owe a total sales tax of 7.50%—$600 in city tax ($30,000 multiplied by .02) and $1650 ($30,000 multiplied by .055) in state tax. You owe a total tax bill of $2,300 on that spiffy Tacoma.
Understanding the Tax Basis of Vehicle Sales
Car sales tax is levied on the purchase price of the vehicle. Unless the purchase price is suspiciously low, the value is assumed to be the car's purchase price.
Some people have the bright idea of negotiating an artificially low purchase price and then paying the difference in a side transaction. Do not attempt this; the county treasurer's office is ahead of you.
The county treasurer establishes what the car is worth on the open market (its fair market value, or FMV) by referring to the Kelley Blue Book, NADA value, or other reliable sources on used car prices.
If the county treasurer's office establishes that the car's FMV is significantly greater than its purchase price, they can opt to base the tax on the NADA assessed value.
Note that underreporting the purchase price of a vehicle in order to avoid paying sales tax is illegal.
What is the Use Tax?
The use tax is a percentage of a car's purchase price that is owed to the state of Nebraska when the vehicle is brought into the state for registration.
When purchasing a car out-of-state you will have to pay a 5.5% use tax (the same rate as the sales tax) when you register the car in Nebraska. On top of that, you may owe local sales taxes as well.
If you paid sales tax on car purchases in another state, Nebraska deducts that tax so that you are not taxed twice. There are three potential scenarios (leaving out local taxes for simplicity).
- If you paid less than 5.5%, you will have to pay the difference. Let’s say you bought a used car in South Dakota for $25,000. South Dakota sales tax rates are 4%, so you paid $1,000 (.04 X $25,000) in South Dakota tax. When you go to register your car in Nebraska, your total tax bill will be $1,000 minus the $1325 you already paid in Nebraska. You can expect to pay $325 to Nebraska.
- You paid no sales tax in another state. Let's say you bought a used car in Montana and didn’t pay sales tax, given Montana’s 0% tax rate. You’ll pay Nebraska's 5.5% use tax.
- You paid more than 5.5% in the other state (for example, Kansas levies a 7.5% tax on every used vehicle purchase). We wish we could tell you that Nebraska will give you a refund, but no. At least they won’t charge you any more tax.
How to Avoid Paying Sales Tax on Vehicles in Nebraska?
Vehicle taxes are something you just can't avoid—they are a part of our lives. Here are the only two ways we know of for you to avoid paying sales tax on a vehicle purchase.
1. Move to a state that doesn’t have a vehicle sales tax and buy a car there.
2. Qualify for a sales tax exemption in Nebraska.
Nebraska Vehicle Sales Tax Exemptions
Most states offer exemptions for government vehicles, religious organizations, military personnel, and other categories. For a full list of Nebraska sales tax exemptions, check with your local treasurer's office.
License Plates, Title, And Registration Fees in Nebraska
In addition to vehicle sales taxes, you owe other fees when buying a car and registering it in Nebraska, such as a registration fee and a car title transfer fee.
To register your vehicle at the Nebraska county treasurer’s office, you must show proof of car insurance. First-time passenger vehicle registration costs $15, plus the $10 title fee.
Nebraska's standard license plate fees are $8.20. Specialty license plates cost up to $70.
Is Purchasing a Car from a Dealer Better?
Many people believe that buying a car from a Nebraska dealer will save them money. Actually, going to a Nebraska dealer is more expensive.
- Dealerships charge documentation fees above and beyond all the other Nebraska 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 Nebraska is $299.
- Used car dealerships usually have higher prices. Their business model is based on buying low and selling high in order to generate the spread that allows them to stay in business. Skip the middleman and deal directly with private sellers to get the best deals.
We admit that dealers offer a level of convenience that is not typically available when purchasing from a private seller. After all, that is why we exist. PrivateAuto puts dealer-like convenience in the palm of your hand while also allowing you to transact with regular people like yourself.
When you buy a used car from a private seller on PrivateAuto, you avoid the doc fee and get a better deal.
Nebraska Car 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 vehicle sales tax calculator calculates the amount of tax you must pay on a used car purchase based on the combined state and local sales tax rate in Nebraska (5.5%) 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 the steps to selling your car in Nebraska.
- Gather the required paperwork for selling a vehicle in Nebraska
- 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 car title
Nebraska Vehicle Sales Tax FAQ
What are motor vehicle taxes in Nebraska?
Motor vehicle taxes in Nebraska are annual taxes levied on the value of a vehicle. They are paid at the county treasurer's office in the county in which the vehicle is registered. The tax amount is determined by the Nebraska Department of Revenue based on the vehicle's value.
Vehicle sales taxes, on the other hand, are levied when a vehicle is bought.
Which states have the lowest car sales tax rates?
The states with the cheapest car tax are Alaska, Delaware, Montana, New Hampshire, and Oregon, with a tax rate of zero. Nevada and Hawaii have a zero tax rate on private-party car sales, but not on dealership purchases.
With the exception of the above states, all US states charge sales tax on private sales. Oklahoma, North Dakota, North Carolina, Colorado, Wyoming, and Alabama charge 4.5% or less vehicle sales tax.
What kind of insurance does my used car need?
Used cars, just like new cars, are required to have liability auto insurance at a minimum. Every insurance company will have different rates, so shop around.
Nebraska requires you to carry evidence of your auto insurance in your car. Liability insurance is mandatory in Nebraska. You can consider purchasing collision, comprehensive, and gap insurance, but these are not required.
How to transfer a vehicle title in Nebraska?
In the state of Nebraska, transferring the car title and registering your vehicle will be done at the same time. When purchasing a used car, you will need to provide your local county treasurer's office with the following documents:
- The original title signed and dated by both the buyer and seller
- The application for vehicle registration (Form VP222)
- Evidence of insurance card
- The current odometer reading recorded on the original title
- Payment for all necessary fees
For more in depth information, read our Nebraska title transfer guide.