Unlike many other states, North Dakota doesn’t have local sales tax; 2% is the most car sales tax you’ll pay in North Dakota.
Keep reading to get the full scoop on North Dakota sales tax liabilities for your used vehicle purchase.
Do you Pay Taxes When You Purchase a Car From a Private Party in North Dakota?
When buying a vehicle in North Dakota, you’ll pay 2% of the vehicle’s purchase price, whether you purchase from a private seller or a car dealer. North Dakota's sales tax law does not discriminate between the two.
Unless you qualify for a tax exemption (discussed below), you are required to pay tax on your vehicle purchase.
How is Used Car Sales Tax Calculated in North Dakota?
Motor vehicle sales tax is a percentage of a car's purchase price owed to the state of North Dakota when you buy a car and register it with the North Dakota Department of Transportation.
The North Dakota Department of Transportation (NDDOT) establishes what the car is worth on the open market (it’s fair market value, or FMV) by referring to Kelley Blue Book, NADA, or other reliable sources on used car prices.
If NDDOT concludes that the car's FMV is significantly greater than its purchase price, they can opt to base tax on the Kelley Blue Book or NADA assessed value.
Note that underreporting the purchase price of a vehicle in order to avoid paying sales tax is illegal.
North Dakota Sales Tax vs Use Tax
North Dakota's sales tax and use tax are both 2%. Each is a percentage of a car's purchase price owed to the state of North Dakota when you buy a car and register it in North Dakota.
- Sales tax is for cars purchased within the state.
- Use taxes, or excise taxes, are for cars purchased outside the state and brought into the state for registration.
The vehicle use tax ensures that vehicles purchased within the state and cars brought into the state are taxed identically.
If you paid sales tax on the purchase of a vehicle in another state, North Dakota deducts that tax so that you are not taxed twice. There are three potential scenarios.
- You paid exactly 2% sales tax in Alabama; North Dakota will give you a pass.
- You paid no sales tax in another state, in which case you owe the full 2% North Dakota tax rate. Let's say you bought a used car in Montana and didn’t pay any sales tax, given Montana’s 0% tax rate. You’ll pay North Dakota’s full 2% use tax.
- You paid more than 2% in the other state (for example, South Dakota levies a 4% tax on every used vehicle purchase). We wish we could tell you that North Dakota will give you a refund, but no. At least they won’t charge you any more tax.
How to Pay North Dakota Car Sales Tax
Here's how to pay the sales tax owed after buying a vehicle from a private seller in North Dakota:
- 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 North Dakota 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 North Dakota insurance.
- Valid driver’s licenses or IDs
- Calculate the amount of sales tax due. Multiply the vehicle's purchase price by 2%.
- Submit payment for all taxes and fees.
- 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 by mail.
If you buy a used car from a private seller,it is recommended that both you and the seller go to a North Dakota Motor Vehicle Division branch to finish the transaction, which protects both of you.
How to Avoid Paying Sales Tax on Vehicles in North Dakota?
Motor vehicle taxes are something you just can't avoid—they are a part of our lives. You are required by law to pay sales tax on private party used vehicle purchases in North Dakota or any other state that charges sales tax—unless you meet an exemption.
Sales Tax Exemptions
You can be exempt in North Dakota if you are a:
- Disabled veteran
- American Indian tribal member
- Government agency
- Nonprofit organization
- Owner of a homemade trailer
Is Purchasing a Car from a Dealer Better?
A lot of people mistakenly believe that buying a car from a North Dakota dealer saves money. The opposite is true: going to a North Dakota dealer costs you more money, and it's a pain—unless spending 3 hours in a North Dakota dealership is your idea of a good time.
- Dealerships charge documentation fees above and beyond all the other North Dakota 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 North Dakota is $171.
- Used car dealerships 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 in private sales. 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 used vehicles from private sellers on PrivateAuto, you avoid doc fees and get lower prices.
North Dakota Sales Tax Calculator
If you're in the market for a used vehicle, you'll want to calculate the applicable sales tax. With our 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 sales tax rate (2%) and the vehicle's price.
License Plates, Title And Registration Fees in North Dakota
In addition to the state vehicle sales taxes, you owe other fees when buying a car and registering it in North Dakota, such as a registration fee and a car title transfer fee.
To register your vehicle at a North Dakota Motor Vehicle Division (MVD) office, you must show proof of valid car insurance. The first time you register a passenger vehicle, you will need to do the title transfer, which will cost you $5.
Registration fees are based on the weight and the year first registered, not the vehicle model year.
For more info about the registration fees, see the North Dakota MVD page.
North Dakota's standard license plate fee is $25. A specialty plate costs an additional $25 to $100.
Purchase or Sell Vehicles Online With PrivateAuto
PrivateAuto is the only transactional marketplace where you can sell and buy vehicles conveniently.
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. You can also schedule a test drive and negotiate the price without ever disclosing your personal information.
Here’s how you can sell your car in North Dakota with a few simple steps:
- Gather the required paperwork for selling a car in North Dakota
- Register on PrivateAuto and get verified
- List your vehicle
- Set your terms
- Vet incoming offers
- Choose a buyer
- Schedule a meeting
- E-sign documents
- Get paid instantaneously with PrivateAuto Pay
- Transfer title
ND Sales Tax Frequently Asked Questions
Which state has the cheapest sales tax on car sales?
The states with the cheapest car tax are Alaska, Delaware, Montana, New Hampshire, and Oregon, with a tax rate of zero. Nevada has a zero tax rate on private-party car sales, though not on dealership purchases.
With the exception of the above states, all US states charge sales tax on private-party car purchases. Oklahoma,North Dakota, North Carolina, Colorado, and Alabama charge 4.5% or less vehicle sales tax.
How do I transfer a title in North Dakota?
To transfer a vehicle title in North Dakota, you need to submit the following to the NDDOT office:
- Completed vehicle title certificate.
- Proof of identity (real ID).
- A completed application for certificate of title and registration of a vehicle (Form SFN 2872)
- A completed damage/salvage disclosure statement (Form SFN 18609).
- Payment for the title transfer fee and sales taxes
- Odometer reading disclose (vehicles over 10 years old)
For more info, read our North Dakota title transfer guide.
How to transfer a vehicle title when you have an out-of-state title?
If you are transferring the title of an out-of-state vehicle in North Dakota, you will need to provide the following documents:
- Proof of identification
- Proof of a valid ND vehicle insurance policy
- Original out-of-state title
- A completed ND vehicle registration application
- A completed certificate of ownership
How do you protect yourself when buying a car privately?
To protect yourself when buying a car privately, we recommend the following practices:
- Never give out your contact information
- Deal with verified sellers only
- Have a bill of sale to legally validate the transaction
- Send the payment through PrivateAuto Pay
The best way to protect yourself when buying a car privately is by buying it on a secure platform that offers these features (such as PrivateAuto).
What is needed for North Dakota vehicle registration?
If you are registering a car in North Dakota, you will need to submit the following to the North Dakota DOT:
- Valid insurance card
- Proof of vehicle inspection
- Proof of ownership
If you fall under one of these categories, you are not required to register the car:
- Nonresident students
- Members of the Armed Forces