How Much are Used Car Sales Taxes in Maryland?

Buying a used car can save you some cash, but don’t forget about sales tax. Maryland charges 6% sales tax on vehicle purchases.

Maryland calls their sales tax an “excise tax,” but it’s really the same thing: a 6% tax on the purchase price or book value of a car. Unlike many other states, Maryland doesn’t have local sales taxes; 6% is the most you’ll pay in tax on your vehicle purchase.

Keep reading to get the full scoop on Maryland sales tax liabilities for your used car purchase.

Do you Pay Taxes When you Purchase a Vehicle From a Private Party in Maryland?

According to the Maryland Motor Vehicle Administration, “An excise tax will be charged on the basis of 6% of the vehicle's book value or 6% of the purchase price on the notarized “Bill of Sale” for vehicles 7 years old or newer. For older vehicles, the tax is calculated on the purchase price. Maryland's minimum excise tax charged is $38.40, based on a minimum value of $640.”

You’ll pay 6% of the vehicle’s purchase price, whether you buy from a private seller or a car dealer. Maryland tax law does not discriminate between the two. Unless you qualify for a tax exemption (covered below), you’ll owe tax on your vehicle purchase.

Sales Tax vs Use Tax

Sales tax is a percentage of a car's purchase price, as we’ve already discussed. You owe it to the state of Maryland when you buy a vehicle and register it in Maryland.
How Much are Used Car Sales Taxes in Indiana?
Use taxes are pretty much the same thing, but for out-of-state vehicles. When you buy a vehicle out-of-state and register it in Maryland, the state will levy a 6% use tax (the use tax rate is the same as the sales tax rate). The use tax essentially levels the playing field by taxing cars purchased in the state and cars brought into the state equally.

If you paid sales tax in another state on your vehicle purchase, Maryland will usually deduct the other state's tax so that you aren't taxed twice. There are four potential scenarios.

1. You paid exactly 6% sales tax in Washington, DC or one of the states with the same 6% sales tax rate as Maryland, in which case Maryland will give you a pass.
2. You paid no sales tax in another state, in which case you owe the full 6% Maryland sales tax. Let's say you bought a used car in Delaware and didn’t pay any sales tax, given Delaware’s 0% tax rate. You’ll pay Maryland’s full 6% sales tax.
3. You paid less than 6% sales tax in another state, in which case Maryland charges you the difference. Let’s say you bought a used Dodge Demon in North Dakota for $50,000. North Dakota’s tax rate is 4%, so you paid $2,000 (.04 X $50,000) in North Dakota tax. When you go to register the vehicle in Maryland, your total tax bill will be $3,000 minus the $2,000 you already paid in North Dakota, for a total due of $1000 to Maryland.
4. You paid more than 6% in the other state (for example, California levies a 7,25% tax on vehicle purchases). We wish we could tell you Maryland will give you a refund, but no. At least they won’t charge you any more tax.
To report sales and use tax, fill out the sales and use tax final return (Form SUT202FR)

License Plates, Title And Registration Fees in Maryland

In addition to the state sales tax, you owe other fees when buying a car and registering it in Maryland, such as car registration fees and car title transfer fees.

To register your vehicle at the Motor Vehicle Administration branch of the Maryland Department of Transportation (MDOT), you must show proof of car insurance. First-time registrations cost between $135 and $187, plus the $100 title fee.

Maryland's standard license plate fee is included in the registration fee. A vanity plate costs an additional $50.
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How is Used Car Sales Tax Calculated in Maryland?

Sales tax in Maryland is calculated based on the vehicle's purchase price. There are people who think they can outsmart the government by negotiating a low "official" purchase price and paying the rest in a side transaction. But the Comptroller (the office that oversees taxation for the state of Maryland) can’t be fooled so easily.

If the Comptroller of Maryland suspects that the purchase price of the vehicle was artificially decreased, they will calculate sales tax based on the car’s fair market value.

The Comptroller’s office establishes what the car is worth on the open market by referring to Kelley Blue Book 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 tax on the fair market value.

It is important to note that underreporting the purchase price of a vehicle in order to avoid paying sales tax is illegal. If you are caught doing this, you could be subject to a fine of up to $5,000.

How to Pay Maryland Vehicle Sales Tax

Here's how to pay car tax after buying a used car in Maryland from a private seller:
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 Maryland 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 with an odometer reading and the seller’s signature
3. Current proof of insurance.
4. The buyer and the seller’s valid driver’s licenses or IDs
5. Calculate the amount of sales tax due. Multiply the vehicle's purchase price by 6%.
6. Fill out the sales tax form.
7. Submit payment for all taxes and fees.
8. Get payment proof from the Comptroller of Maryland.
9. Get your registration, title and new license plates. Once you've paid the sales tax and turned in the necessary documents, 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 your 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 MVA branch office to finish the transaction, which protects both of you. If you do not complete the transfer of title within 30 days of the sale, you will be charged a late transfer penalty fee.

How to Avoid Paying Tax on Cars in Maryland?

There's no getting around it; car taxes are an unavoidable part of life. You are required by law to pay the tax on private used car purchases in Maryland or any other state that charges sales tax—unless you meet an exemption.

Maryland Car Tax Exemptions

How Much are Used Car Sales Taxes in Maryland?
Here are some tax exemptions for used vehicle purchases in Maryland:

Purchases made by the federal government, the state government, or a political subdivision of the state: this exemption applies to all vehicle purchases made by the federal government, the state government, or any political subdivision of the state. This includes purchases made by municipalities, school districts, and other government entities.
Purchases by a nonprofit organization exempt from federal income tax: this exemption applies to all vehicle purchases by a nonprofit organization exempt from federal income tax. This includes organizations such as churches, hospitals, and charities.
Vehicles purchased for religious, charitable, or educational purposes: this exemption applies to all purchases of vehicles for religious, charitable, or educational purposes. This includes vehicles that are used to transport people to and from religious services, to and from charitable events, or to and from educational institutions.
Vehicle purchases for agricultural purposes: this exemption applies to all purchases of vehicles used for agricultural purposes. Vehicles used to transport livestock, to and from the farm, or to and from the market are included.
Purchases of vehicles used for public transportation: this exemption is applicable to all purchases of vehicles used for public transportation. Vehicles used by public bus companies, taxi companies, and other public transportation providers are included.
Purchases of vehicles for the use of a disabled person: this exemption applies to all purchases of vehicles used by a disabled person. Vehicles specially designed for people with disabilities, such as wheelchair accessible vans, are included.

Is Buying a Car from a Dealer Better?

Many people believe that buying a car from a dealership is a magical way to avoid all of the hassle (and possibly some fees). In fact, going to a Maryland dealer will cost you more money and is not particularly convenient, unless you enjoy spending three hours in a dealership.

Dealerships charge documentation fees above and beyond all the other taxes and fees you have to pay (which are exactly the same whether you buy from a dealer or a private seller). The average documentation fee in Maryland is $295.
Dealers usually charge higher prices for used cars. Their business model is based on buying as low as possible and selling as high as possible to make the spread that keeps them in business. Cut out the middleman and go directly to private sellers to get the best deals.
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 PrivateAuto exists. We give you dealer-like convenience in the palm of your hand while allowing you to transact peer-to-peer with regular folks like yourself.

When you shop for used cars from private sellers on PrivateAuto, you can avoid the doc fee and get lower prices.

Maryland Vehicle Sales Tax Calculator

If you're in the market for a used vehicle, you'll need to calculate the amount of sales tax you'll be required to pay. While it is not necessary to be a rocket scientist to calculate taxes, determining your sales tax amount can be time-consuming.

Calculating sales tax has never been easier than with our used car sales tax calculator. This free online calculator determines how much tax you must pay on a used car purchase based on your tax rate (6%) and your vehicle's purchase price.

Buy Or Sell a Car Online With PrivateAuto

PrivateAuto is the only transactional marketplace where you can easily and conveniently buy and sell used cars and get the deal done from start to finish.
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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 Maryland with a few simple steps:

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.

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.

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.

Set your terms

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 according to your preferences.

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 information is protected: no more giving out your phone number or email address. All communication happens in our app.

Choose a buyer

When you find an offer you like, accept it and proceed to the next step with that buyer.

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 drives and coordinate a time and place for meetings. (Oh, and you’ll be able to finalize the transaction instantly at the first meeting, FYI.)

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.

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.

Transfer title

When you sell your vehicle, fill out the necessary information on the back of the certificate of title and sign it in order to transfer ownership of the vehicle to the new owner.

Maryland Car Tax Frequently Asked Questions

Do vehicles in Maryland need to go through safety inspection?

To transfer a vehicle title in Maryland, vehicle owners are required to undergo emissions testing, which ensures the vehicle is safe for the road. The following counties require emission testing to complete a title transfer:

- Anne Arundel
- Baltimore
- Carroll
- Calvert
- Cecil
- Charles
- Fredrick
- Howard
- Hartford
- Montgomery
- Prince George
- Queen Anne
- Washington
During the vehicle smog testing process, the MVA will conduct three tests.

1. Gap Cap Test, specifically designed for cars with model years between 1977 and 1995 weighing less than 8,500 pounds.
2. Onboard diagnostic test (OBD), specifically designed for car model years 1996 and newer that weigh less than 8,500 pounds, and heavy-duty vehicles model years newer than 2008 and weighing between 8,501 and 14,001 pounds.
3. Tailpipe idle test, specifically designed for car model years between 1977 and 1995 that weigh up to 26,000 pounds, and heavy-duty cars with model years newer than 2008 that weigh less than 8,500 pounds.
In Maryland, the Vehicle Emissions Inspection Program (VEIP) test fee is $14. For those who use a self-service kiosk, the fee will be $10.

If your car fails the test, the first retest will be free.

**Emission Check Exemptions in Maryland**

Some eligible car owners can apply for an MVA inspection exemption by completing the back side of the VEIP inspection form (Form EP-1) and submitting the form in person to the Motor Vehicle Administration or by mail.

Emissions test exemptions in Maryland are:

- Car models older than 1976 or vehicles weighing more than 26,000 pounds
- Diesel-powered or an electric vehicle
- Historic/antique cars
- Hybrid vehicles
- New vehicles
- Cars owned by senior citizens over 70 years old or qualifying cars with mental disability tags

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