How Much Is Car Sales Tax in Texas?

Purchasing a motor vehicle in Texas involves more than just the sticker price; it also includes a state-mandated sales tax. Understanding how this tax is applied is an important part of the vehicle buying process. This tax impacts both new and used vehicle acquisitions, and its proper calculation and timely payment are responsibilities for all car buyers in the state.

Understanding Texas Motor Vehicle Sales Tax

Texas imposes a motor vehicle sales tax on vehicle sales within the state. This tax is applied at a rate of 6.25% of the sales price. The tax applies to both new and used vehicles, regardless of whether they are purchased from a licensed dealer or a private party.

When buying from a licensed dealer, the dealer typically collects the sales tax at the time of purchase and remits it to the county. For private-party sales, the purchaser is directly responsible for paying the tax. The tax is remitted to the local County Tax Assessor-Collector’s office when the vehicle is titled and registered.

Calculating Your Texas Motor Vehicle Sales Tax

The base sales tax rate is 6.25% of the vehicle’s sales price. This sales price generally refers to the total amount paid for the vehicle, excluding certain non-taxable charges like registration fees.

For used vehicles purchased from a private party, the tax calculation introduces a concept known as Standard Presumptive Value (SPV). SPV is a value determined by the Texas Department of Motor Vehicles (TxDMV) based on regional market averages for similar vehicles. The tax is calculated on the greater of the actual sales price or 80% of the vehicle’s SPV. Buyers can find the SPV for a specific vehicle by entering its Vehicle Identification Number (VIN) and odometer reading on the TxDMV website.

If a used vehicle is purchased for less than 80% of its SPV, the tax will be based on that 80% SPV amount, unless a certified appraisal is provided. This appraisal, obtained from a licensed motor vehicle dealer, can establish a lower taxable value if the vehicle’s condition justifies it. However, the appraised value cannot be less than the actual purchase price. The value of a trade-in vehicle can reduce the taxable amount. If a vehicle is traded in as part of the purchase, the sales tax is applied only to the difference between the new vehicle’s price and the trade-in allowance.

Special Scenarios and Exemptions

Several specific situations alter how Texas motor vehicle sales tax applies. When a vehicle is purchased out-of-state but will be titled and registered in Texas, a use tax of 6.25% of the sales price is generally due. However, credit may be given for sales or use taxes already paid to the other state, reducing the amount owed to Texas. For new residents bringing a vehicle previously registered in their name from another state, a flat $90 new resident tax is typically paid instead of the standard 6.25% use tax.

For leased vehicles, the sales tax is handled differently than a direct purchase. The lessor, which is usually the leasing company, is responsible for paying the 6.25% motor vehicle sales tax when the vehicle is initially purchased and titled in Texas. The tax is calculated on the total amount of the lease payments over the term of the lease.

A $10 gift tax applies when a motor vehicle is transferred between eligible parties for no consideration. Eligible relationships typically include transfers between spouses (for separate property), parents, children, grandparents, and siblings. Both the donor and recipient must complete a Form 14-317 to qualify for this reduced tax. If a transfer is made for no consideration to an ineligible party, it is treated as a sale, and SPV procedures may apply for calculating the tax.

Limited exemptions exist for certain organizational uses. Vehicles purchased by specific government agencies or qualifying non-profit organizations may be exempt from sales tax. These exemptions are typically contingent on the vehicle being used exclusively for the organization’s established purposes and proper documentation of their tax-exempt status.

Paying Your Texas Motor Vehicle Sales Tax

Once the motor vehicle sales tax has been calculated, the payment process involves specific steps and locations. The tax is generally paid to your local County Tax Assessor-Collector’s office. This payment is typically due at the time of titling and registering the vehicle in your name.

For vehicles purchased from a private party, the purchaser is responsible for remitting the tax within 30 calendar days of the purchase date. Active-duty military personnel typically have 60 days to title and register their vehicle.

When paying the tax, you will need to bring several documents, including the signed vehicle title, a bill of sale (though not always mandatory, it helps document the price), proof of identity, and proof of insurance. The Application for Texas Title and/or Registration (Form 130-U) must also be completed and submitted.

Most County Tax Assessor-Collector offices accept various payment methods, including checks and money orders, and often credit or debit cards, though a processing fee may apply for card payments. If the tax is paid late, a penalty of 5% may be assessed for payments made 1-30 days after the due date, increasing to 10% if paid over 30 days late.