What Is Sales Tax on a Car in Utah?
Navigate the essential financial obligations of car purchases in Utah. Understand how sales tax impacts your vehicle acquisition and ensure full compliance.
When purchasing a vehicle in Utah, sales tax applies to both new and used car purchases. This article clarifies how vehicle sales tax is calculated, when certain situations alter typical tax application, and the process for remitting these taxes.
Understanding Utah Sales Tax on Vehicles
Sales tax on vehicles in Utah is a levy applied to the purchase price of a car, whether acquired from a licensed dealership or a private seller. The buyer is responsible for paying this tax.
The sales tax rate for vehicles in Utah has two main components: a statewide rate of 4.85% (Utah Code §59-12-103) and local sales tax rates. Local rates are imposed by cities and counties, varying by purchase location (Utah Code §59-12-204).
These two rates combine to form the total sales tax rate for a vehicle transaction. The tax is calculated based on the vehicle’s purchase price.
Calculating Your Vehicle’s Sales Tax
Sales tax is applied to the vehicle’s agreed-upon purchase price, which is the amount paid before any additional fees. This forms the base for the tax calculation.
A trade-in vehicle’s value can reduce the taxable amount. Sales tax applies only to the difference between the new vehicle’s purchase price and the trade-in value (Utah Code §59-12-104). For example, if a car is purchased for $30,000 with a $10,000 trade-in, sales tax is calculated on the $20,000 difference.
Manufacturer rebates directly reduce the vehicle’s selling price, lowering the taxable amount. Dealer or financing incentives, applied after the sale price, may not reduce the taxable amount for sales tax purposes.
To apply the combined rate, identify the local sales tax rate for the city or county where the vehicle will be registered or sold. Add this local rate to the statewide rate of 4.85% to determine the total percentage. Multiply this combined percentage by the vehicle’s taxable price.
For instance, if a vehicle is purchased for $25,000 with no trade-in in an area with a 2.00% local sales tax rate, the total rate would be 6.85% (4.85% statewide + 2.00% local). The sales tax would be $25,000 multiplied by 0.0685, resulting in $1,712.50. If the same $25,000 vehicle included a $5,000 trade-in, the taxable amount would be $20,000, and the sales tax would then be $20,000 multiplied by 0.0685, equaling $1,370.00.
Exemptions and Special Considerations
Vehicles received as bona fide gifts are generally exempt from sales tax. To qualify, specific documentation, such as a gift affidavit, is required when titling the vehicle.
When a resident purchases a car out of state, a credit may be provided against Utah sales tax liability if sales tax was paid in the state of purchase. This prevents double taxation. If no sales tax was paid out of state, the full Utah sales tax rate applies upon registration.
Vehicles used exclusively in agricultural operations might be exempt from sales tax under specific conditions.
Sales tax on leased vehicles is applied to each individual lease payment, rather than the full sales tax upfront on the vehicle’s total value. This means the tax is spread out over the lease term.
Purchases on tribal lands within Utah may fall under distinct tax regulations. State sales tax rules may not apply depending on tribal agreements and buyer residency. Buyers should verify tax implications for these transactions.
Paying Your Vehicle Sales Tax
The process for remitting vehicle sales tax in Utah varies by purchase location. For vehicles acquired from a licensed dealer, the dealer collects the sales tax from the buyer and remits it to the Utah State Tax Commission.
When a vehicle is purchased from a private seller, the buyer pays the sales tax directly to the Utah Division of Motor Vehicles (DMV) when registering the vehicle. Buyers should account for this tax liability when budgeting for a private party purchase.
To complete sales tax payment at the DMV for a private party purchase, specific documents are necessary:
- Original bill of sale
- Vehicle’s title
- Odometer disclosure statement
- Vehicle identification number (VIN) inspection (may be required)
Buyers typically have 30 days from the purchase date to register their vehicle and pay the sales tax.
Failure to pay sales tax within the established timeframe can result in penalties and interest charges (Utah Code §59-1-401). Buyers should adhere to registration and payment deadlines to avoid these additional costs.