How Much Is Sales Tax in Arkansas for a Car?

When purchasing a vehicle, understanding the associated sales tax is an important part of the overall cost. This article explains how vehicle sales tax is determined and paid, detailing applicable tax rates, calculation methods, and payment steps.

Understanding Arkansas Vehicle Sales Tax Rates

Vehicle purchases in Arkansas are subject to a statewide sales tax rate. This state tax applies uniformly across all vehicle transactions, regardless of where the purchase occurs. The statewide sales tax rate is 6.5%.

In addition to the state sales tax, local sales taxes may also apply, which vary by city and county. These local taxes are levied based on the buyer’s residence or the location where the vehicle is purchased, depending on local ordinances. The combined total sales tax rate is the sum of the state, county, and city rates.

To determine local sales tax rates, individuals can utilize resources from the Arkansas Department of Finance and Administration (DFA) or consult with the dealership. Online tools or official state revenue websites offer lookup functions where a zip code or address can be entered to find the combined state and local sales tax rate.

Calculating Your Vehicle Sales Tax

Sales tax on a vehicle in Arkansas is calculated on the net purchase price. The purchase price is the agreed-upon amount for the vehicle before any deductions or additions.

The value of a trade-in vehicle can reduce the sales tax owed. When a buyer trades in an older vehicle, sales tax is calculated only on the difference between the new vehicle’s purchase price and the trade-in allowance. For example, if a vehicle costs $30,000 and a trade-in is valued at $10,000, the taxable amount would be $20,000.

This reduction applies to both new and used vehicles. Whether purchasing from a licensed dealer or a private seller, the method for determining the taxable amount remains consistent. Sales tax rates apply equally, regardless of the vehicle’s prior ownership history.

Consider a scenario where a vehicle is purchased for $25,000 with no trade-in, and the combined state and local sales tax rate is 9%. The sales tax due would be $2,250 ($25,000 x 0.09). If the same $25,000 vehicle is purchased with a $5,000 trade-in, the taxable amount becomes $20,000. In this instance, with a 9% tax rate, the sales tax owed would be $1,800 ($20,000 x 0.09).

Exemptions and Special Considerations

Certain situations allow for reductions or complete exemptions from vehicle sales tax in Arkansas. For instance, vehicles acquired by non-profit organizations or governmental entities might qualify for an exemption, depending on their tax-exempt status and the vehicle’s intended use. These exemptions are governed by statutes and require proper documentation.

Transfers of vehicles between immediate family members may qualify for reduced tax or exemption, though conditions and limitations apply. Such transfers require affidavits or other documentation to confirm the familial relationship and the nature of the transfer.

When a vehicle is purchased out-of-state but subsequently registered in Arkansas, sales tax may still be due. The state grants a credit for sales tax paid to another state, preventing double taxation. However, if the tax paid in the other state is less than what would be owed in Arkansas, the difference must be paid upon registration.

Sales tax is distinct from other fees associated with vehicle ownership. Additional costs include title fees, registration fees, and license plate fees.

The Process of Paying Vehicle Sales Tax

The timing and method for paying vehicle sales tax depend on whether the vehicle was purchased from a licensed dealer or a private party. When buying from a dealership, the dealer collects the sales tax at the time of purchase. The dealership then remits these funds to the Arkansas Department of Finance and Administration on behalf of the buyer.

For vehicles purchased from a private seller, the buyer is responsible for directly paying the sales tax. This payment is due within 30 days of the purchase date, and it must be paid when the vehicle is registered and titled in the buyer’s name. Failure to pay within this timeframe may result in penalties.

Sales tax for private party sales is paid at a local Arkansas Department of Finance and Administration (DFA) Revenue Office. When visiting, buyers should bring several documents, including the vehicle’s title, a bill of sale detailing the purchase price, and proof of insurance. Accepted payment methods at Revenue Offices include cash, checks, money orders, and credit or debit cards.