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Indiana sales tax and fees on used cars | Indy Auto Man, Indianapolis

Indiana Sales Tax on Cars

Here we gathered the most popular questions about Indiana sales taxes on cars. Get prepared for the purchase – find out how much money you should put aside for additional payments, how to cut down on taxes, and in what cases you don’t need to pay them at all.

Read our Indiana sales tax guide, where you will also find information about the documents you need to register a car, timeframes and other essential issues of the car buying process.  

What are the Tax Laws for Buying a Car in Indiana?

When you buy a car, you have to pay Indiana sales tax on the purchase, plus excise tax to register the vehicle. The state charges a 7% sales tax on the total car price at the moment of registration. Although trade or dealer discounts are taken off from the sales price, any manufacturer discounts are not deducted from the sales price for tax purposes. For example, let’s say you decide to trade your eight-year-old sedan for a two-year SUV that the dealer sells for $17,000. The dealer gives you $4,000 for your trade-in. This brings your taxable selling price down to $13,000, and you will owe $910 in sales tax ($13,000 * 7%).

How to register a car in Indiana?

Indy Auto Man collects Indiana sales tax on cars on behalf of the state. It means that we take all the sales tax responsibilities and do all the paperwork for you. If you buy a vehicle directly from a private person, you are responsible for paying tax at your local Bureau of Motor Vehicles upon registration. Check the list of documents you will need to register a car in Indiana

Are there any deadlines to register a car in Indiana state?

You have 45 days to complete the vehicle title. After this deadline, you will have to pay a late registration fee. 

If I live in another state and buy a car in Indiana, where should I pay sales tax?

The car sales tax is based on the state where you will register your vehicle, so you will have to pay only the sales tax of the state you live in. Used cars are not taxed in Alaska, Delaware, Montana, Oregon and New Hampshire. You might also be responsible for the local tax or fees that might apply to your city or county. 

Should I pay tax to register my car in Indiana if I paid tax in my state of residence?

If you buy a car in another state and pay sales tax there, you receive a credit for the amount you paid. If the tax rate of your state is less than 7%, you have to pay the difference to get the Indiana title for the car. 

Is buying a vehicle out of state more complicated?

When buying a car at Indy Auto Man, you can be sure that it will be just as simple as buying one in your state of residence. We collect the sales tax of the customer’s state and take care of the documentation.

Is there any opportunity not to pay taxes at all in Indiana?

You do not need to pay car sales tax, if:

  • You receive it from someone as a gift. Likewise, transfer of ownership between family members are exempt from sales tax;
  • You buy a vehicle to use it for hire in public transportation in Indiana;
  • You buy a car on behalf of a nonprofit or governmental agency;
  • You are a dealer and buy a car for resale;
  • You buy Indy 500 race car components, except for Tires and accessories.

What is excise tax?

After the registration of your new vehicle, you have to pay the excise tax. The amount of it depends on the age of your vehicle and its original retail price. You can determine the amount you are about to pay based on the Indiana excise tax table

For example, if you bought the two-year-old SUV for the original retail price of $25,000, you would have to pay an excise tax of $304. At the same time, if you bought this SUV when it was ten years old, your tax would be $36.

Do I need to pay sales tax when purchasing from a dealer?

Yes, but the dealer can calculates the title fees and taxes into a total amount you have to pay for the car and complete the title work for you.

What is a down payment?

Are you going to buy a used car? You can make a down payment to account for fees and taxes. Down payment is money that you pay in cash at the point of sale. Banks need it as a guarantee of your further loan payments. And if suddenly you are unable to pay, the bank will take the down payment. The higher the down payment, the less risk the bank has, and the better the financing conditions you will get.

We usually recommend depositing between 10% and 20% of the car value as a down payment. This amount should cover all your taxes and fees and some others provided that you pay close to the initial sticker price.

However, you should always set aside some amount of money, even if you only cover taxes and fees for your car up to the set price. It can help you plan your finances better.

Finance Your Used Car at Indy Auto Man

Come to Indy Auto Man, Indianapolis and get professional advice on how to make your car buying deal the most advantageous.

Our experts at Indy Auto will help you deal with Indiana sales taxes on cars, get the best financing conditions and do all the paperwork, whether you buy a car for cash, choose trade-in or opt for financing options. 

Get a pre-approved car in Indianapolis at Indy Auto Man – fill out this online form