Used Car Sales Tax in Washington State
Navigate Washington's requirements for paying sales tax on a used vehicle, including how the tax is calculated and the steps to finalize your title.
When purchasing a used vehicle in Washington, the state imposes a use tax on the transaction. This tax is calculated based on the vehicle’s value and the buyer’s residential address. To complete the sale, buyers must determine the taxable amount, identify their tax rate, and gather the correct paperwork for titling and registration.
Calculating the Taxable Amount of the Vehicle
The use tax calculation is based on the vehicle’s taxable value. Washington state law requires the tax to be levied on the greater of the vehicle’s purchase price or its “reasonable market value.” The Department of Revenue (DOR) determines this market value by referencing standardized pricing guides.
A bill of sale provides proof of the purchase price. If the price on the bill of sale is substantially lower than the assessed market value, the DOR will base the tax on its higher valuation. For example, if a car is purchased for $5,000 but its market value is $7,000, the use tax will be calculated on the $7,000 figure.
An exception exists if the purchase price is not more than 20% below the fair market value or if the vehicle’s value is less than $7,500. In these cases, the purchase price is accepted for tax purposes. If the price is lower, the buyer may need to provide documentation justifying the price.
Determining Your Specific Sales Tax Rate
The total sales tax is a combination of several taxes. It begins with the statewide base sales tax of 6.5% and adds a 0.3% motor vehicle sales/lease tax, for a state-level total of 6.8%. Local jurisdictions, including cities, counties, and Regional Transit Authorities (RTA), also levy their own sales taxes.
The applicable tax rate is determined by the buyer’s primary residence, not the location where the vehicle was purchased. If you live in a city with a high local tax rate and buy a car in a county with a lower rate, you are subject to the rate of your home address. Combined rates can range from over 7% to more than 10%.
The Washington State Department of Revenue provides an online tax rate lookup tool to find the precise rate for your address.
Common Tax Exemptions and Reductions
Certain circumstances may exempt a new vehicle owner from use tax. The most common exemptions are for vehicles received as a gift or as part of an inheritance. For the gift exemption to apply, no payment can be exchanged for the vehicle, and the giver must provide proof that Washington sales or use tax was previously paid. Vehicles transferred as part of an inheritance are also exempt if the estate supplies proper documentation.
A trade-in credit can reduce tax liability when purchasing from a licensed dealer, but it is not available in private-party sales. The value of the trade-in is subtracted from the purchase price of the new vehicle, and sales tax is calculated on the remaining amount. For example, if you buy a car for $15,000 and your trade-in is valued at $4,000, you will pay sales tax on the $11,000 difference.
Required Information and Documents for Tax Payment
Before visiting a vehicle licensing office, you must gather a specific set of documents. Having all forms completed accurately before your visit will prevent delays. Required documents include:
- The vehicle’s title, properly signed by both the seller and the buyer. For vehicles 20 years old or newer, the Odometer Disclosure Statement section on the title must be completed by the seller.
- A completed Vehicle/Vessel Bill of Sale, which details the vehicle’s information, purchase price, and sale date.
- A completed Vehicle Title Application, which requires your name and address, as well as the vehicle’s identification number (VIN), make, model, and year.
- A Declaration of Buyer and Seller Regarding Value of Used Vehicle Sold form, if the purchase price is significantly below the vehicle’s assessed fair market value. This serves as a sworn statement justifying the lower price.
The Process of Paying the Tax and Titling the Vehicle
The final step is to visit a local vehicle licensing office with your completed documents. You have 15 days from the date of purchase to transfer ownership and avoid penalties. At the office, an agent will review your paperwork and you will pay all applicable fees.
The total amount will include the calculated use tax, titling fees, registration fees, and license plate fees. Most offices accept payment via cash, check, or credit/debit cards.
After payment, you will receive a new registration certificate and, if needed, new license plates, allowing you to operate the car legally. The official new vehicle title showing you as the legal owner will be mailed by the state, typically arriving within six to eight weeks.