15 States With the Cheapest Sales Tax on Cars (Some Have a 0% Rate)

To keep costs low when buying a new car, most drivers consider factors like saving money on car insurance and locking in a loan with a reasonable interest rate. But it’s just as important to pay attention to your state’s car sales tax, which you pay at the time of purchase — and can easily add $1,000 or more to your final sales price.

For instance, if you purchase a $35,000 car in a state with a 4% car sales tax rate, your tax burden would be $1,400, bringing your total purchase to $36,400. Buying the same car in a state with a 6.85% tax rate adds an extra $2,887.50, meaning you’ll pay $37,887.50 for the exact same vehicle.

Below, we walk you through the 15 states with the lowest car sales tax, including five states that charge 0% on some or all vehicle sales.

In Virginia, where the average cost of a used car is $33,724, consumers pay a 4.15% Sales and Use Tax (SUT). If you bought a car at that price in Virginia, your total tax burden would be $1,399.55, bringing the total sales price to $35,123.55.

It’s worth noting that the 4.15% tax rate applies to the car’s gross sales price. Even if you get a dealership discount by trading in your old car, the state calculates the sales tax based on the car’s cost before the trade-in discount.

In Hawaii, where the average used car costs $32,381, the 4% car sales tax adds $1,295.24 to the sale, bringing the total cost to $33,676.24.

The Aloha State’s low tax rate is good news for Hawaiian drivers, who pay more for gas than residents of most other states, barring notoriously pricey West coast states like California.

At $41,405, Wyoming has the highest average used car cost of all 50 states. Fortunately, since Wyoming’s car sales tax rate is one of the lowest in the nation, car owners are able to keep purchase costs relatively low.

With a total tax burden of $1,656.20, the average car sales price comes to $43,061.20.

New Mexico’s average used car has a listing price of $35,189, a tax burden of $1,407.56, and an after-tax sales cost of $36,596.56. The sales tax of an average car is about half the cost of a year’s worth of auto insurance, which averages $2,207 across the state.

In New York, where the average used car costs $33,246, a 4% tax rate adds $1,329.84 and brings the car’s cost to an average of $34,575.84.

Even with the comparatively low tax rate, New York drivers spend more money than average on cars — especially New York City residents, who pay around $6,000 a year in gas and insurance costs.

The average listing price for a used car is $37,192 in South Dakota, meaning sales tax averages $1,487.68 and the total cost averages $38,679.68.

Along with saving on sales tax, South Dakota drivers save money on gas since the state’s average is $3.02 per gallon, which is $0.10 below the national average.

With an average cost of $35,509, a used-car buyer in Oklahoma pays $1,154.04 in taxes for a total sales price of $36,663.04.

Unfortunately, Oklahomans also pay a staggering $2,768 per year in car insurance, which is the fourth highest rate in the nation.

In North Carolina, the average used car is listed at $34,725. The 3% tax rate adds an extra $1,041.75, bringing the final cost to $35,766.75.

Even better, North Carolina has some of the lowest average car insurance costs in the country as well as below-average gas prices.

In Colorado, the average used car costs $35,269. Thanks to the below-average tax rate of 3.9%, the sales tax comes to $1,022.80, resulting in a $36,291.80 purchase.

However, with an average of over $2,500 a year in car insurance premiums, Colorado drivers might still end up spending more on cars than drivers in states with high taxes and low insurance.

The average used car in Alabama is listed at $34,206. The 2% sales tax adds $1,022.80, totalling $36,291.80.

Plus, Alabama’s current average gas price is $2.79 and dropping, which puts car owners in a budget-friendly spot across the state.

Alaska is one of just five states without a sales tax on cars. That’s good news for Alaskan car owners, since the average used sales car price in the state is an above-average $40,462.

While Delaware has the fifth-highest average insurance cost for minimum coverage, its 0% car sales tax rate keeps costs low for new buyers. The average cost of a car in the state is $32,924 with no sales tax attached.

With an average used car price of $38,943, no car sales tax rate to speak of, and a below-average cost of living across the state, Montanans have more room in their budget for car upgrades.

At just $31,833, New Hampshire has the lowest average price for cars out of any state on our list. Even better, residents don’t pay any sales tax on their car purchase, so the price you see is the price you get… at least when it comes to taxes.

A used car in Oregon costs an average of $35,556. While the state’s cost of living is relatively high, its 0% car sales tax rate helps residents save a little cash.

Where you live can have a huge impact on your financial fitness. Expenses like state taxes on car purchases add up over time, so if you’re planning a move, make sure to consider state-specific financial factors like property taxes, average utility costs, and overall cost of living.

If moving to a cheaper state isn’t an option, budgeting for these costs ahead of time can ensure your budget stretches as far as possible in your new home.