How Much Are Used Car Sales Taxes in Texas?
Are you thinking about buying a used car in Texas? Sales taxes and other fees can increase your out-of-pocket expenses well above the purchase price. We give you the lowdown on Texas vehicle sales taxes to help you avoid any surprises.
The statewide rate for used car sales tax in the state of Texas is 6.25% of the vehicle’s purchase price. Local rates are added to the statewide rate, but they never exceed 2%, so the highest total tax rate you’ll pay in Texas is 8.25%.
Keep reading to get the scoop on used car sales taxes in Texas.
Keep reading to get the scoop on used car sales taxes in Texas.
Do You Pay Taxes When You Buy a Car From a Private Seller in Texas?
When you buy a car and register it in Texas, you owe sales tax—whether you purchase from a dealer or a private seller. The tax law does not make a distinction for private party vehicle sales.
The statewide sales tax on vehicles in Texas currently stands at 6.25% of the purchase price of the car. For example, if you buy a used car from a private party for $10,000, you’ll pay $625 in sales tax plus local (city and county) tax, depending on where you live in the state.
Some Texas cities and counties levy an additional local sales tax, while others don’t.
The statewide sales tax on vehicles in Texas currently stands at 6.25% of the purchase price of the car. For example, if you buy a used car from a private party for $10,000, you’ll pay $625 in sales tax plus local (city and county) tax, depending on where you live in the state.
Some Texas cities and counties levy an additional local sales tax, while others don’t.
Additional Taxes in Texas
Local taxes don’t exceed 2% anywhere in the state, meaning the highest tax rate you can pay in Texas is 8.25% of the purchase price of your car.
Total DMV fees for a new or used car purchased in the state average $850. This includes title transfer fees, Texas license plate fees, and registration fees.
Check the official Texas Comptroller website for further information on sales and use tax responsibilities.
Total DMV fees for a new or used car purchased in the state average $850. This includes title transfer fees, Texas license plate fees, and registration fees.
Check the official Texas Comptroller website for further information on sales and use tax responsibilities.
How is Used Car Sales Tax Calculated in Texas?
Sales taxes are assessed as a percentage of the vehicle’s purchase price. If you think you can outsmart the state by negotiating a low “official” purchase price and paying the remainder in a side transaction, think again. The Texas Department of Motor Vehicles (DMV) is way ahead of you.
Understanding Fair Market Value
The Texas Department of Motor Vehicles has the option of using the car's "fair market value" (not the car price) as the basis for calculating sales tax. The DMV establishes what the car is worth on the open market by referring to the Kelley Blue Book or other reliable sources of information about used car prices. If the DMV concludes that the car's fair market value is greater than the purchase price, the sales tax can be assessed based on the fair market value.
If you’re buying the car from a private party, you should declare the car's fair market value to the DMV and pay the appropriate amount of sales tax based on that value. Failing to do so may result in fines and penalties.
If you’re buying the car from a private party, you should declare the car's fair market value to the DMV and pay the appropriate amount of sales tax based on that value. Failing to do so may result in fines and penalties.
Standard Presumptive Values
Whether you purchased a vehicle from a private seller or dealer, in Texas or out of state, you must calculate your sales tax using the Standard Presumptive Value (SPV). According to the Texas Department of Motor Vehicles, the SPV in Texas determines a vehicle's worth based on similar sales in the state. The SPV of a used car can be calculated using the SPV calculator on the Texas DMV website.
If you purchased the vehicle for less than the standard presumed value, you can pay sales taxes on a certified appraisal amount. Make sure that the assessment is performed by a qualified motor vehicle dealer or a licensed insurance adjuster within 20 business days of the car's purchase.
If you purchased the vehicle for less than the standard presumed value, you can pay sales taxes on a certified appraisal amount. Make sure that the assessment is performed by a qualified motor vehicle dealer or a licensed insurance adjuster within 20 business days of the car's purchase.
How to Avoid Paying Sales Tax on a Car in Texas?
A transfer of a motor vehicle that does not qualify as a gift is considered a retail transaction and is subject to the 6.25% motor vehicle tax. Unless you qualify for an exemption, there is no way to legally avoid paying sales tax on used cars in Texas or in any other state where sales tax is levied.
Who is Exempt From Paying Taxes in Texas?
Here are some tax exemptions for used vehicle purchases.
To apply for sales tax exemptions, submit the Texas Application for Exemption (AP-204 Form) to the Comptroller's office.
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A motor vehicle gifted to an eligible relative or non-profit organization is tax-free. The donator pays a gift tax of $10.
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Certain hydrogen-powered motor vehicles are exempt from motor vehicle taxes. These include vehicles that are hydrogen-power capable with a fuel economy of at least 45 miles per gallon, or fully hydrogen-powered vehicles. (This exemption does not include battery powered electric motor vehicles.)
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Foreign diplomats, consular officers, certain consular personnel, and consular family members are exempt from motor vehicle tax if the car is titled and registered in the United States.
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Orthopedically handicapped drivers with limited movement of body extremities or loss of physical functions are exempted from sales taxes. Unless the motor vehicle has been substantially modified, the physical impairment must be sufficient that the handicapped person is either unable to operate or be reasonably transported in a motor vehicle.
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When a motor vehicle is purchased and used by a public agency it is exempt from motor vehicle tax.
To apply for sales tax exemptions, submit the Texas Application for Exemption (AP-204 Form) to the Comptroller's office.
Moving to a State With No Vehicle Sales Tax
The best way to avoid paying taxes on used cars is to move to a sales-tax-free state, then buy a used car and register it there. There are five states in the US that do not charge sales taxes on new or used cars: Alaska, New Hampshire, Oregon, Delaware, and Montana.
If you plan to move to one of these states, you should postpone purchasing a car until after the move. Otherwise, we don't recommend attempting to avoid paying car sales tax in Texas or anywhere else. The thousands of dollars you might save are not worth the legal and financial implications, nor the loss of your peace of mind.
If you plan to move to one of these states, you should postpone purchasing a car until after the move. Otherwise, we don't recommend attempting to avoid paying car sales tax in Texas or anywhere else. The thousands of dollars you might save are not worth the legal and financial implications, nor the loss of your peace of mind.
How to Pay Texas Vehicle Sales Tax
1. Calculate the amount of sales tax due depending on the tax rate for your city and county. The Texas sales tax rate on cars is 6.25 percent. To figure out how much the sales tax is, multiply the price of the car by 0.0625. If you bought a car for $10,000, for instance, the sales tax would be $625. If you live in a city or county that levies additional sales tax, add the local tax rate to the statewide tax rate to get your total tax rate, then divide the total rate by 100 and multiply the car’s purchase price by the resultant number. To make things easier, use our sales tax calculator.
2. Complete the Texas Title and/or Registration Application (Form 130-U) with the seller.
3. Bring the completed form, along with the computed sales tax amount, to the county tax office or an authorized deputy.
4. Pay the sales tax and any other fees that apply, such as title and registration fees, with cash, check, money order, or credit card. You have to do this in person.
5. Get a receipt for your payment.
6. If applicable, the county tax office will process your payment and provide your registration and license plates.
7. Once you've paid the sales tax and turned in the necessary paperwork, 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 also get new license plates.
2. Complete the Texas Title and/or Registration Application (Form 130-U) with the seller.
3. Bring the completed form, along with the computed sales tax amount, to the county tax office or an authorized deputy.
4. Pay the sales tax and any other fees that apply, such as title and registration fees, with cash, check, money order, or credit card. You have to do this in person.
5. Get a receipt for your payment.
6. If applicable, the county tax office will process your payment and provide your registration and license plates.
7. Once you've paid the sales tax and turned in the necessary paperwork, 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 also get new license plates.
Buy and Sell Used Cars on PrivateAuto
Conduct private car transactions easily and safely with PrivateAuto. 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.
PrivateAuto allows you to negotiate the price you want, schedule the test drive meetup, and pay for the car—all within our app without compromising your personal information.
Whether you want to shop used cars for sale or are trying to sell your used car for top dollar, PrivateAuto will help you get the deal done.
Get started with PrivateAuto today.
Here’s how you can sell your car in Texas with a few simple steps.
1. Gather necessary documentation
You’ll need your vehicle title and other documentation. Have all the paperwork you need to sell your car privately, so you’re not scrambling to find it at the moment of completing a sale.
2. Register on PrivateAuto and get verified
To make PrivateAuto a safe place for everyone, we require email, phone, and driver’s license verification, including facial recognition.
3. List your car
Easily create your PrivateAuto listing with our step-by-step guide. Bonus: we include a window brochure with a QR code scannable to your listing.
4. Set your terms
It’s your car, so you drive the deal! You can control where, when, and who you meet. Decide whether to accept only ID-verified buyers, or buyers with verified funds. Don’t waste your time with buyers who aren’t verified to your preference.
5. Vet incoming offers
Manage offers in one place with the ability to accept, reject, or counter offers within the app. Listing on multiple sites? Filter all communications through PrivateAuto by sharing your listing link on all platforms. Your personal info is protected: no more giving out your phone number or email address. All communication happens in our app.
6. Choose a buyer
When you find an offer you like, accept it and proceed to the next step with that buyer.
7. Schedule a meeting
The buyer will want to look at your car. No more back and forth texts. You never have to give out your phone number. Rather, use our handy scheduling feature to schedule test driving and coordinate a time and place for meeting. (Oh, and you’ll be able to finalize the transaction instantly at the first meeting, FYI.)
8. E-sign documents
After the buyer is satisfied with your car and the two of you have agreed on a purchase price, you can easily e-sign the bill of sale within our app, from your phone. With our shared documents feature, you can easily locate the paperwork needed after the sale.
9. Get paid, instantly
Before PrivateAuto, receiving funds was the most stressful part of the entire selling process, especially for any used car sale over $5,000. There just aren’t a lot of good ways to move large amounts of money quickly and conveniently. Those days are over! Verify and receive funds instantaneously with PrivateAuto Pay, our innovative banking integration. Guaranteed funds for transactions large and small.
10. Transfer title
When you sell your vehicle, fill out the necessary information on the back of the Certificate of Title and sign in order to transfer ownership of the vehicle to the new owner.
PrivateAuto allows you to negotiate the price you want, schedule the test drive meetup, and pay for the car—all within our app without compromising your personal information.
Whether you want to shop used cars for sale or are trying to sell your used car for top dollar, PrivateAuto will help you get the deal done.
Get started with PrivateAuto today.
Here’s how you can sell your car in Texas with a few simple steps.
1. Gather necessary documentation
You’ll need your vehicle title and other documentation. Have all the paperwork you need to sell your car privately, so you’re not scrambling to find it at the moment of completing a sale.
2. Register on PrivateAuto and get verified
To make PrivateAuto a safe place for everyone, we require email, phone, and driver’s license verification, including facial recognition.
3. List your car
Easily create your PrivateAuto listing with our step-by-step guide. Bonus: we include a window brochure with a QR code scannable to your listing.
4. Set your terms
It’s your car, so you drive the deal! You can control where, when, and who you meet. Decide whether to accept only ID-verified buyers, or buyers with verified funds. Don’t waste your time with buyers who aren’t verified to your preference.
5. Vet incoming offers
Manage offers in one place with the ability to accept, reject, or counter offers within the app. Listing on multiple sites? Filter all communications through PrivateAuto by sharing your listing link on all platforms. Your personal info is protected: no more giving out your phone number or email address. All communication happens in our app.
6. Choose a buyer
When you find an offer you like, accept it and proceed to the next step with that buyer.
7. Schedule a meeting
The buyer will want to look at your car. No more back and forth texts. You never have to give out your phone number. Rather, use our handy scheduling feature to schedule test driving and coordinate a time and place for meeting. (Oh, and you’ll be able to finalize the transaction instantly at the first meeting, FYI.)
8. E-sign documents
After the buyer is satisfied with your car and the two of you have agreed on a purchase price, you can easily e-sign the bill of sale within our app, from your phone. With our shared documents feature, you can easily locate the paperwork needed after the sale.
9. Get paid, instantly
Before PrivateAuto, receiving funds was the most stressful part of the entire selling process, especially for any used car sale over $5,000. There just aren’t a lot of good ways to move large amounts of money quickly and conveniently. Those days are over! Verify and receive funds instantaneously with PrivateAuto Pay, our innovative banking integration. Guaranteed funds for transactions large and small.
10. Transfer title
When you sell your vehicle, fill out the necessary information on the back of the Certificate of Title and sign in order to transfer ownership of the vehicle to the new owner.
Texas Used Car Sales Tax FAQ
What fees other than the sales tax do I need to pay in Texas?
Here are some additional expenses you may face when buying a car in Texas:
- Title transfer fee: $28-33. This fee varies by local cities and counties.
- License fee: $51.75 is the base fee, with an additional $10 for local fees
- Registration fee: $50.75
- Vehicle registration for new residents: $90
- Emissions fee: 1–2.5% (1% for diesel vehicles 1997 and newer, greater than 14,000 lbs, 2.5% for diesel vehicles 1996 and older greater than 14,000 lbs)
- Title transfer fee: $28-33. This fee varies by local cities and counties.
- License fee: $51.75 is the base fee, with an additional $10 for local fees
- Registration fee: $50.75
- Vehicle registration for new residents: $90
- Emissions fee: 1–2.5% (1% for diesel vehicles 1997 and newer, greater than 14,000 lbs, 2.5% for diesel vehicles 1996 and older greater than 14,000 lbs)