Massachusetts Car Sales Tax: What You Need to Know
Get a clear overview of the 6.25% Massachusetts car sales tax. Understand how the final tax is determined and what is required for a smooth RMV transaction.
When purchasing a vehicle in Massachusetts, buyers are subject to a motor vehicle sales or use tax. This tax is levied at a rate of 6.25% and is collected by the Registry of Motor Vehicles (RMV) when the vehicle is titled and registered. The distinction between a sales tax and a use tax depends on where and from whom the vehicle was purchased, but the rate remains the same.
Calculating the Vehicle Sales Tax
How the taxable sales price is determined differs based on the seller. When purchasing from a licensed motor vehicle dealer, the sales tax is calculated on the sales price of the vehicle minus the amount credited for a trade-in.
For transactions between private parties, the use tax is based on either the actual amount paid for the vehicle or its clean trade-in value as listed by J.D. Power Values, whichever figure is higher. This is done to prevent the underreporting of the purchase price. For instance, if you purchase a car from a neighbor for $8,000, but its clean trade-in value is $10,000, the 6.25% tax will be applied to the $10,000 value.
Common Sales Tax Exemptions
One of the most frequent exemptions is the transfer of a vehicle between immediate family members. These qualifying relationships are strictly defined as a spouse, parent, child, or sibling, including step-relations and adopted children. Transfers to or from grandparents, aunts, uncles, or cousins do not qualify for this family exemption.
New residents moving into Massachusetts may also be exempt from the use tax on a vehicle they bring with them. To qualify, the vehicle must have been purchased and registered in another state for more than six months before being brought into Massachusetts. If the vehicle was owned for less than six months, the owner may be required to pay a use tax, though they might receive credit for sales tax already paid to the previous state.
A vehicle that is transferred to a beneficiary as part of an inheritance from a deceased owner is not subject to the sales tax. Additionally, sales of motor vehicles to certain federally recognized 501(c)(3) charitable organizations are exempt from the tax. In each of these cases, the new owner must provide specific documentation to the RMV to prove their eligibility for the exemption.
Required Documentation and Forms
All applicants will need the vehicle’s original certificate of title, properly assigned by the previous owner, and a bill of sale. Proof of active Massachusetts auto insurance is also required for registering any vehicle.
Two forms are central to the tax payment and registration process. The Application for Registration and Title (Form RMV-1) is the primary document required for all transactions. This form captures owner information, vehicle details, and includes a section where the purchase price must be declared for tax calculation. Your insurance agent must stamp this form to certify coverage.
For private party sales, the Motor Vehicle Certificate of Payment of Sales or Use Tax (Form ST-7R) is also required. This document addresses the use tax and requires information about the buyer, seller, and vehicle. Both forms can be obtained from the official Mass.gov website.
The Payment and Registration Process
The application package and payment must be submitted to an RMV Service Center within 10 days of the vehicle’s purchase date to avoid penalties. The completed Form RMV-1, the vehicle’s title, and Form ST-7R for private sales are presented to an RMV agent who will verify the information and calculate the final amount due.
Payment for the sales tax, title fee, and registration fee must be made in full during this visit. Acceptable payment methods include checks, money orders, and most major credit or debit cards. The title fee is $75, while registration fees vary depending on the type of license plate issued.
Once the transaction is complete, the owner receives a new vehicle registration and license plates. The official certificate of title is processed separately and mailed to the owner, or the lienholder if the vehicle is financed, within a few weeks. The vehicle must also pass a state safety inspection within seven days of its new registration.