New York Car Sales Tax: Everything You Need To Know
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If you’re looking to buy a new or used car in the state of New York, please acquaint yourself with the New York car sales tax. To avoid sticker shock when purchasing a vehicle in New York, you should understand all the components of the taxes and fees associated with buying a car in this state.
So, how much is the New York car sales tax?
To quickly answer your question, New York imposes a state tax rate of 4% on all car sales transactions. In addition, you may have to pay an additional payment of up to 4.5% for local or county tax.
For today’s post, we discuss everything you need to know about purchasing cars in the state of New York and the associated sales taxes. Keep reading to learn more.
How Much is the New York Car Sales Tax?
New York collects a 4% sales tax from all car sales, whether brand-new or used. However, depending on the city or county you’re buying from, an additional up to 4.5% sales tax will be applied on top of the 4%. This means you’re looking at a potential maximum sales tax of 8.5% when purchasing a car in the state. In addition, car sales in New York may be subject to other fees such as registration, title, and plate fees.
To nobody’s surprise, New York City has the highest possible car sales tax rate at 8.88%. On the other hand, the counties with the lowest tax rates outside the Big Apple are Saratoga, Warren, and Washington Counties, with a 7% sales tax rate.
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How to Calculate New York Car Sales Tax?
To calculate your sales tax when buying a car in New York, you may use the official sales tax calculator tool provided by the New York State Department of Taxation and Finance. This online tool allows you to calculate your sales tax by inputting your address and zip code to receive an estimate of state and local taxes you may be subjected to when buying a vehicle in New York. Next, you must multiply the sales tax percentage provided by the tool by the vehicle’s sales price to receive the estimated amount you’ll pay for your NY car sales tax.
On a related note, there are other factors you may want to consider to get an accurate calculation of your car sales tax, including:
- Manufacturer rebates
- Cash incentives from the manufacturer or dealership
- Whether the car is sold below fair market value
In other states, dealers’ or manufacturers’ rebates and incentives are considered discounts and not part of the selling price, so they’re not subject to sales tax. Therefore, your sales tax will be calculated after the rebates or incentives are subtracted because only the amount you’ve paid out of pocket is subject to taxation. That’s not the case in New York because you’ll still pay for the sales tax amount before subtracting the rebates and cash incentives from the sales price.
Meanwhile, if you bought a car under fair market value, you’ll be required to submit a DTF-802 form with details of the sales transaction.
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What About Car Trade-Ins in New York?
When you’re doing a trade-in, dealerships will allow you to trade your old vehicle and apply the credit toward your new car purchase. In the state of New York, the trade-in value of your car is not subject to car sales tax which helps you save more money.
Let’s say you’re buying a Toyota RAV4 Hybrid in New York City worth $30,000 and trading in an old vehicle for a $3,000 credit. You’ll only have to pay a combined sales tax rate of 8.88% on $27,000 of the purchase price. Thus, you’re only paying for sales tax on the amount you’re paying out of pocket.
Who’s Exempted from New York Car Sales Tax?
Generally, all car sales transactions are subject to sales tax. However, some individuals and entities can apply for sales tax exemptions by submitting the New York DMV’s Form DTF-803. The following may apply for car sales tax exemptions:
- You’re an active member of the U.S. armed forces but not a resident of New York and purchased the car out of state.
- You were not a resident of New York at the time of the vehicle purchase.
- You acquired the vehicle (but didn’t purchase it) via an estate settlement.
- You’re planning to use the car primarily for farm work.
- You receive the vehicle as a gift or purchase from a family member.
We highly recommend checking out the New York DMV website for more information on sales tax exemption.
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What Other Additional Fees to Keep in Mind?
When purchasing a new or used car in New York, there are other fees you may have to cover on top of the sales tax. In general, you’ll have to count in additional fees such as title and registration, documentation, and plate transfer fees. As of this writing, here’s a breakdown of the costs that may be collected when purchasing a car in NY:
- Registration fee: $32.50 to $140 on average
- Title fee: $50
- Plate transfer: $10
- Documentation fee: $75
On average, the New York DMV collects around $74 total in fees.
Why Are New York Car Sales Tax So High?
New York has one of the highest car sales taxes in the country and is significantly higher than other states. Some states, such as Alaska, Delaware, Montana, New Hampshire, and Oregon, don’t even impose sales tax on new or used cars, while Maryland, North Carolina, Iowa, or South Dakota provide opportunities to skip the tax.
According to BluntMoney, the main reason for the high sales tax on cars in New York is mainly due to politics and state revenue requirements. To summarize, sales tax is among the highest in New York due to higher paying standards, higher cost of living, high expense in removing snow, high cost of repair and maintenance of roads, etc. Unfortunately, there’s no way to avoid paying the high car sales tax as a resident of New York.
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