Understanding Sales Tax on a Used Car in Florida: What Buyers Should Know
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Considering a used car purchase? If so, you'll want to know about the sales tax on a used car in Florida. All buyers incur a 6% sales tax on used cars unless an exemption applies. You may also owe a discretionary surtax depending on your county of residence.
Sales tax is just one of the costs you incur when buying a vehicle. Other expenses to expect include titling and registration fees. You'll also need auto insurance in Florida that complies with state requirements.
Overview of Sales Tax on Used Cars in Florida
Florida residents pay sales tax for almost anything they buy — new cars, used cars, even a night on the town. Since Florida doesn't impose state income tax, it uses the revenues from its sales tax to pay for public services and projects.
The current used car sales tax in Florida is 6%. And, depending on where you reside in Florida, you may owe a discretionary sales surtax, too. That can make your vehicle's sales price much higher than you expected.
Understanding Florida's 6% Base Sales Tax Rate
Florida's 6% sales tax rate applies to your vehicle's purchase price and ancillary expenses, including closing costs, accessories, and dealer commissions. You also pay sales tax on the dealer's delivery and freight costs, if it has any.
The Florida used car sales tax does not apply to legal fees to register or title the vehicle. A dealer also can't charge sales tax for recording the vehicle's lien.
Local Surtaxes: How County and City Taxes Affect Your Purchase
On top of the state's vehicle sales tax, you may owe a discretionary surtax. The surtax rate varies by county, ranging from 0% to 1.5%.
Counties set the discretionary rate and its expiration date. When the discretionary rate gets close to expiring, local officials decide whether to keep it, change it, or let it lapse.
The discretionary rate only applies to the first $5,000 of a vehicle's sales price. For instance, if you buy a used car for $15,000 and the county surtax is 1.5%, you only pay the surtax on $5,000 of the vehicle's price, coming out to $75.
Exemptions and Caps on Sales Tax for Used Cars
Is there any way to avoid the Florida sales tax on used cars? There are a few exemptions to look into — but most won't apply to the typical, run-of-the-mill used car purchase.
You may get an exemption if you're a registered motor vehicle dealer planning to resell the vehicle. The exemption applies to both in-state and out-of-state dealers provided they can show credible documentation.
A business may not owe sales tax if it has a Florida Consumer's Certificate of Exemption, buys the car using entity funds, and obtains a certificate of title in the organization's name.
A more likely way for everyday consumers to save money on sales tax is through a partial exemption. Florida recognizes out-of-state buyer's sales tax rates, and it applies yours to any Florida used car purchase. For example, if you're buying a Florida car as an Alabama resident, your auto sales tax rate is 2%. You'll incur a 2% tax at the time of purchase, and you won't owe a discretionary surtax.
Dealer vs. Private Sale: Differences in Tax Obligations
The tax reporting obligations vary between motor vehicle dealers and private individuals. Florida considers anyone who sells more than two vehicles over 12 months to be a dealer. All dealers must register with the state and enroll in its sales tax reporting program.
Private sellers don't have to collect sales tax from the buyer. Instead, they notify their local Florida tax authorities of the motor vehicle sale using the Notice of Sale form. The buyer pays the sales tax during the registration process.
Other Fees to Consider: Registration and Title Transfer Costs
Before you can start driving your new vehicle, you must title and register it in your name. Title and registration aren't free. The current fee is $225 for initial registration and $85.25 for a certificate of title. If you don't have any plates to transfer from an old vehicle, you must buy a new set.
The Florida Highway Safety and Motor Vehicle (FLHSMV) fees change frequently, so double-check current rates before you head to your local office.
Keep in mind that you must show proof of car insurance in Florida before you can register the vehicle.
Example Sales Tax Calculation for a Used Car in Florida
Here's a look at the sales tax calculation in practice. In this scenario, assume you buy a used Mazda for $20,000 from a local Miami-Dade County dealership. You trade in your old Honda for $5,000.
1. Calculate Your Taxable Sales Price
Your taxable sales price is $15,000, or $20,000 minus your $5,000 trade-in credit.
2. Multiply the Florida Sales Tax Rate by the Sales Price
Since your sales price is $15,000, you multiply that by 6%. The total sales tax due is $900.
3. Apply Discretionary Surtax
As a resident of Miami-Dade County, you pay a 1% discretionary tax on the first $5,000 of your purchase, or $50.
Ready To Hit the Road? Get Your Used Car Insured Today
You've taken care of the hard part — finding a vehicle and buying it. But before you can start driving, you need an insurance policy that complies with Florida state laws. EverQuote helps customers find cheap car insurance in Florida. When you complete our free online form, you receive a comparison of insurance rates from major providers. Save time shopping for insurance with us!