How are vehicle sales taxed in Arizona?
Arizona Sales Tax on Car Purchases:
Vehicles purchases are some of the largest sales commonly made in Arizona, which means that they can lead to a hefty sales tax bill. This page covers the most important aspects of Arizona's sales tax with respects to vehicle purchases. For vehicles that are being rented or leased, see see taxation of leases and rentals.
Arizona collects a 6.6% state sales tax rate on the purchase of all vehicles. However, the total tax may be higher, depending on the county and city the vehicle is purchased in. County tax can be as high as 0.7% and city tax can be up to 2.5%.
In addition to taxes, car purchases in Arizona may be subject to other fees like registration, title, and plate fees. You can find these fees further down on the page.
Do Arizona vehicle taxes apply to trade-ins and rebates?
How are trade-ins taxed?
Many dealerships allow you to trade-in your old car in exchange for a credit applied to the price of a new vehicle. For example, you could trade-in your old car and receive a $5,000 credit against the price of a $10,000 new vehicle, making your out-of-pocket cost only $5,000.
In Arizona, the taxable price of your new vehicle will be considered to be $5,000, as the value of your trade-in is not subject to sales tax. This means that you save the sales taxes you would otherwise have paid on the $5,000 value of your trade-in.
How are rebates and dealer incentives taxed?
Many dealers offer cash incentives or manufacturer rebates on the sticker price of a vehicle in order to encourage sales. For example, a $1,000 cash rebate may be offered on a $10,000 car, meaning that the out of pocket cost to the buyer is $9,000.
Arizona taxes vehicle purchases after rebates or incentives are applied to the price, which means that the buyer in this scenario will only pay taxes on the vehicle as if it cost $9,000.
Other taxes and fees applicable to Arizona car purchases
In addition to state and local sales taxes, there are a number of additional taxes and fees Arizona car buyers may encounter. These fees are separate from the sales tax, and will likely be collected by the Arizona Department of Motor Vehicles and not the Arizona Department of Revenue.
Title Fee: $4
Registration Fee: $8 - $120
Plate Transfer Fee: $12
Average DMV fees in Arizona on a new-car purchase add up to $5321, which includes the title, registration, and plate fees shown above.
Arizona Documentation Fees
Dealerships may also charge a documentation fee or "doc fee", which covers the costs incurred by the dealership preparing and filing the sales contract, sales tax documents, etc. These fees are separate from the taxes and DMV fees listed above.
The average doc fee in Arizona is $4101, andArizona law does not limit the amount of doc fees a dealer can charge.Because these fees are set by the dealerships and not the government, they can vary dealership to dealership or even vehicle to vehicle.
1 - Average DMV and Documentation Fees for Arizona calculated by Edmunds.com
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FAQs
How Does Sales Tax Work on a New Car Purchase? Just like going to the store and seeing a line item for sales tax on your receipt, buying a new car in Arizona triggers a tax that is due at the time of the transaction. In Arizona, the sales tax on a new car purchase is 5.6%.
Do 100% disabled veterans pay sales tax on vehicles in AZ? ›
100 Percent Disabled Veteran
A veteran owning or co-owning a vehicle is exempt from payment of vehicle license tax or registration fee, if the veteran is certified by the Department of Veterans Affairs to be 100 percent disabled and drawing compensation on that basis.
What is the sales tax in the state of Arizona? ›
The state use tax rate is the same as the state transaction privilege tax (TPT) rate (sometimes referred to as sales tax), currently at 5.6 percent.
How much are tax title and license fees in Arizona? ›
When you purchase a vehicle in Arizona, you`ll need to obtain a title and register the vehicle with the Arizona Department of Transportation (ADOT). The title fee is $4, and the registration fee varies based on the vehicle`s weight, with the minimum fee being $8 for vehicles under 3,000 pounds.
What city in Arizona has the cheapest sales tax? ›
The lowest rate, 7.6 percent, is in Huachuca City, near the Fort Huachuca military base. Other combined rates for larger cities in the state include Glendale (9.2 percent), Mesa (8.05 percent), Peoria (8.1 percent), Surprise (8.5 percent) and Tempe (8.1 percent).
Does AZ charge property tax on vehicles? ›
The state of Arizona charges a vehicle license tax (VLT) at every registration and renewal. This tax is assessed for each $100 of your vehicle's value.
Do veterans get a discount on vehicle registration in AZ? ›
Arizona 100% Disabled Veteran License Tax and Registration Fee Exemption: Veterans who are 100% disabled and receiving compensation from the VA are eligible for a vehicle license tax and registration fee exemption for one vehicle they own or co-own.
What does 100% VA disability entitle you to in Arizona? ›
Vehicle License Tax and Registration Fees
License tax and registration fees are waived for 100% Disabled Veterans for one personally owned vehicle. If a veteran attained a vehicle with VA financial aid, they are also exempt from paying license taxes.
Who is exempt from paying property taxes in Arizona? ›
Exemption from property taxation is automatically granted for property owned by government entities, which do not impose property taxes on one another. A.R.S. 42- 11102(A) and 42-11103(A) . Accordingly, government-owned property is not subject to any application provisions in order to obtain or maintain exempt status.
What is not taxed in Arizona? ›
Services in Arizona are generally not taxable, with a few exceptions. Tangible products are taxable in Arizona, with a few exceptions. These exceptions include certain groceries, prescription medicine and medical devices, and machinery and chemicals used in research and development.
Some experts say the high sales tax reflects Arizona's decision to rely on less on income taxes for state revenues and more heavily on the purchase of goods and some services. “We've always been heavily reliant on sales taxes,” said Kevin McCarthy, president of the Arizona Tax Research Association.
What state has no sales tax? ›
There are five states with no general statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
How do you figure sales tax on a car in Arizona? ›
How much is the sales tax on a car in AZ? The state charges a sales tax rate of 5.6% on purchasing all cars. But the Arizona car sales tax varies based on the city and county from which you purchase the car. Expect the city tax rate to go as high as 2.5% and the county tax to be around 0.7%.
Why is Arizona vehicle registration so expensive? ›
Fee breakdown...
A vehicle license tax is included as part of the annual fee to register your vehicle. It is based on an assessed value of 60 percent of the manufacturer's base retail price reduced by 16.25 percent for each year since the vehicle was first registered in Arizona (15% before 8-1-98).
How much are license plates in AZ? ›
Duplicate Vehicle Registration - $4.00. License Plate-Personalized - $25.00 Initial fee for one year. License Plate-Specialty - $8.00 - $25.00 Initial fee for one year (Dependent on the plate style) License Plate-Specialty & Personalized - $50.00 Initial fee for one year.
How to calculate sales tax? ›
Here's how to calculate the sales tax on an item or service:
- Know the retail price and the sales tax percentage.
- Divide the sales tax percentage by 100 to get a decimal.
- Multiply the retail price by the decimal to calculate the sales tax amount.
To title and register your out-of-state vehicle, you must have these items: A completed, signed Title and Registration Application. An emissions compliance form (Phoenix and Tucson areas only) An out-of-state title (or registration, if title is held by lienholder)
Is car sales tax based on dealer location? ›
When you buy a car, tax is due based upon the location where the car will be registered (usually the owner's home), not where you bought it. To find the rate for a location in California, go to the CDTFA website and click on Tax & Fee Rates, then click on Sales and Use Tax Rates.
What is the sales tax in Arizona in 2024? ›
Rates effective January 1, 2024 through present. 8.6% Sales Tax Chart - Combined (State of Arizona + Maricopa County + City of Phoenix) tax due on Retail Sales from $0.01 to $100.00.
How are vehicle sales taxed in Arizona?