How Much are Used Car Sales Taxes in Oklahoma?
When buying a used car in Oklahoma, don’t get caught off guard by the state’s vehicle sales tax. Oklahoma has a combined sales tax of 4.5% on vehicle purchases, but it’s not quite as straightforward as a standard percentage.
Oklahoma charges an excise tax and a vehicle sales tax that combine together. Unlike many other states, Oklahoma doesn’t have local taxes.
Keep reading to get the full scoop on Oklahoma sales tax liabilities for your used car purchase.
Keep reading to get the full scoop on Oklahoma sales tax liabilities for your used car purchase.
Does Oklahoma Charge Two Types of Taxes?
According to the Oklahoma Policy Institute, Oklahoma levies two taxes on motor vehicles.
1. Excise tax: $20 on the first $1,500 of vehicle value and 3.25% on the rest of the value. The value is assumed to be the same as the car’s sales price, unless there’s a significant discrepancy (covered below).
2. Sales tax: 1.25% of the value of the car.
It might be helpful to give an example.
1. Excise tax: $20 on the first $1,500 of vehicle value and 3.25% on the rest of the value. The value is assumed to be the same as the car’s sales price, unless there’s a significant discrepancy (covered below).
2. Sales tax: 1.25% of the value of the car.
It might be helpful to give an example.
Oklahoma Car Sales Tax Example
Let's say, for example, that you purchased a Toyota Tacoma for $24,657.00 in Oklahoma. Here are the taxes owed:
1. Excise tax: $20 (for the first $1,500) + [$23,157 * 0.0325 (for the remaining amount)] = $20 + $752.60 = $772.60.
2. Sales tax: $24,657 * 0.0125 = $308.21.
1. Excise tax: $20 (for the first $1,500) + [$23,157 * 0.0325 (for the remaining amount)] = $20 + $752.60 = $772.60.
2. Sales tax: $24,657 * 0.0125 = $308.21.
The combined excise tax and sales tax you'd have to pay when purchasing a Toyota Tacoma for $24,657 in Oklahoma would be $772.60 (excise tax) + $308.21 (sales tax) = $1,080.81.
Understanding the Tax Basis of a Vehicle Sale
Vehicle sales tax is owed on the value of the car you purchased. The value is assumed to be the car’s purchase price—unless the purchase price is suspiciously low.
Some people get the brilliant idea to negotiate an artificially low purchase price, then pay the difference in a side transaction. Don’t do this; the Oklahoma Tax Commission (OTC) is way ahead of you.
The OTC 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 tax commissioners establish 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.
Some people get the brilliant idea to negotiate an artificially low purchase price, then pay the difference in a side transaction. Don’t do this; the Oklahoma Tax Commission (OTC) is way ahead of you.
The OTC 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 tax commissioners establish 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.
How to Pay Oklahoma Car Sales Tax
Here's how to pay the excise and sales tax owed after buying a car from a private seller in Oklahoma:
1. 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 Oklahoma 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:
2. The original car title.
3. Proof of Oklahoma insurance.
4. Valid driver’s licenses or IDs
5. Calculate the amount of sales tax due.
6. Submit payment for all taxes and fees.
7. Get your vehicle registration, title, and new license plates. Once you've paid Oklahoma’s 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 Oklahoma Motor Vehicle Division branch to finish the transaction, which protects both of you.
1. 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 Oklahoma 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:
2. The original car title.
3. Proof of Oklahoma insurance.
4. Valid driver’s licenses or IDs
5. Calculate the amount of sales tax due.
6. Submit payment for all taxes and fees.
7. Get your vehicle registration, title, and new license plates. Once you've paid Oklahoma’s 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 Oklahoma Motor Vehicle Division branch to finish the transaction, which protects both of you.
How to Avoid Paying Sales Tax on Vehicles in Oklahoma?
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 Oklahoma or any other state that charges sales tax—unless you meet an exemption.
Sales Tax Exemptions
Oklahoma exempts the following categories from vehicle excise taxes.
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Disabled veteran. Veterans with 100% disability are exempt but need to show proof, such as the DAV sales tax exemption card or a letter from the VA. The exemption applies to one vehicle every three years from the date of purchase.
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Family transfer. Gifting a car between spouses, or between parents and children, is exempt. A Family Affidavit (Form 794) is required, and the vehicle must be gifted, not sold.
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Trusts. This exemption is valid when transferring a vehicle’s ownership between a trust and trustee. A copy of the trust showing trustee status is required.
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Divorce. Transferring vehicle ownership due to a divorce is exempt. You’ll need to provide a copy of the divorce decree indicating vehicle assignment to one spouse by name, as well as the vehicle's VIN.
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Vehicles purchased by the following entities:
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Agricultural permit holder
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Churches
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Corporations
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Federal credit unions
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Federal land banks
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Fire protection districts
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Housing authorities
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Indian tribal governments
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Insurance companies
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Leasing companies
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Limited liability corporations
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Partnerships
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Public trusts
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Red Cross
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Rental companies
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Rural gas districts
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Automotive dismantlers
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Vehicles brought into Oklahoma by a former resident of another state who owned and registered the vehicle at least 60 days prior to the date on which registration is required in Oklahoma.
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Vehicles acquired through inheritance ownership.
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Vehicles registered under the International Registration Plan.
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Ownership of a vehicle acquired by a lessee as long as the vehicle excise tax was paid at the time of the initial lease or lease-purchase agreement and an Oklahoma title was issued.
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The repossessor who has returned ownership of a vehicle to the former Oklahoma title record owners within 30 days of the issuance of the repossession title.
Is Purchasing a Car from a Dealer Better?
A lot of people mistakenly believe that buying a car from an Oklahoma dealer saves money. The opposite is true: going to an Oklahoma dealer costs you more money, and it's a pain—unless spending 3 hours in an Oklahoma dealership is your idea of a good time.
License Plates, Title And Registration Fees in Oklahoma
In addition to the state vehicle sales taxes and excise taxes, you owe other fees when buying a car and registering it in Oklahoma, such as a registration fee and a car title transfer fee.
To register your vehicle at a licensed operator's 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 $17.
Registration fees are based on the age of the passenger vehicle registered:
