What Is the Car Sales Tax in Philadelphia?
Understand the total cost of buying a car in Philadelphia. This guide explains how the final taxable price and other required fees are determined.
Purchasing a vehicle in Philadelphia involves taxes and fees that go beyond the sticker price. The total cost includes a combination of state and local sales tax, as well as various fixed fees for titling and registration. Understanding how these costs are calculated is part of the car-buying process.
Calculating Philadelphia’s Car Sales Tax
When purchasing a vehicle to be registered in Philadelphia, the transaction is subject to a combined sales tax rate of 8%. This is composed of the 6% Pennsylvania state sales tax and a 2% local sales tax specific to Philadelphia. This percentage is not applied to the sticker price directly but to the vehicle’s taxable value.
The value of a trade-in vehicle, manufacturer rebates, and dealer incentives are all subtracted from the vehicle’s price, which can lead to significant tax savings. For example, if you purchase a $30,000 car and receive a $10,000 allowance for your trade-in and a $1,000 manufacturer rebate, the sales tax is only applied to the remaining $19,000. This results in a tax of $1,520, rather than the $2,400 that would be due on the full price.
Additional Vehicle Registration and Title Fees
Beyond the sales tax, buyers must also pay for state-mandated fees to legally title and register the vehicle. These are separate, fixed costs administered by the Pennsylvania Department of Transportation (PennDOT) and are not based on the vehicle’s value. The primary fees include the certificate of title fee, which is $51, and the standard passenger vehicle registration fee, which is around $48.
If the vehicle purchase is financed, an additional lien recording fee of about $26 may be applied to formally record the lender’s interest in the vehicle. Some counties may also impose a small, local use fee, often around $5, which is collected at the time of registration.
Tax Rules for Leases, Gifts, and Private Sales
The standard tax rules are modified for less common vehicle transactions like leases, gifts, and private sales. When leasing a vehicle in Philadelphia, the 8% sales tax is not calculated on the car’s total value. Instead, the tax is applied to each monthly lease payment for the duration of the lease term. This spreads the tax liability over time rather than requiring a large upfront payment.
For vehicles transferred as gifts between certain immediate family members, such as from a parent to a child or between spouses, a sales tax exemption is available. To claim this exemption, the parties must complete and sign Form MV-13ST, Affidavit of Gift. This form certifies that the transfer is a bona fide gift and not a sale disguised to avoid taxes. Without this form, the state may assess tax based on the vehicle’s fair market value.
In a private party sale, the 8% sales tax is still required. The tax is calculated on the purchase price or the vehicle’s fair market value, whichever is determined to be higher by the Department of Revenue. If a Philadelphia resident purchases a car out-of-state, they are not exempt from tax. Upon returning and registering the vehicle in Pennsylvania, they must pay an 8% use tax.
Paying the Sales Tax
When buying from a licensed dealership, the dealer is responsible for collecting the full sales tax, along with title and registration fees, at the time of the sale. The dealership then remits these collected funds directly to PennDOT on the buyer’s behalf. For a private sale, the buyer must take the signed title and proof of insurance to an authorized notary or tag agent to complete the ownership transfer. At this point, the 8% sales tax must be paid directly to the agent.
The entire transaction is documented on Form MV-4ST, the Vehicle Sales and Use Tax Return/Application for Registration. This form is completed by the dealer or the tag agent, and the buyer receives a copy for their records.