Understanding Pennsylvania Sales Tax on Used Cars: What Buyers Need to Know
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Buying a used car in Pennsylvania requires applicable taxes and fees. One of the primary expenses is the used car sales tax, which is due before you can get your new title and registration.
Keep reading to learn about used car sales tax in Pennsylvania, how much you might pay, other expenses, and how to find cheap car insurance in Pennsylvania.
Overview of Used Car Sales Tax in Pennsylvania
If you purchase a used motor vehicle to register in Pennsylvania, you will be subject to the Pennsylvania used car sales tax.
What is the sales tax on a used car in Pennsylvania? The PA used car sales tax rate is 6% of the vehicle’s sale price or current fair market value. However, Allegheny County has additional sales taxes at a rate of 7%, and Philadelphia has a rate of 8%.
Sales tax is collected when you transfer vehicle ownership in Pennsylvania by applying for a new title or registration. However, the amount and other requirements may vary depending on how or where you purchase the vehicle.
How Sales Tax Is Calculated on Used Cars in Pennsylvania
In most cases, sales taxes are calculated by multiplying the purchase price by .06 to determine 6% of the price. For example, if you buy a car for $6,500, the sales tax is calculated by multiplying $6,500 x .06 to determine the sales tax of $390.
However, some sellers might try to sell vehicles well below market value to reduce the sales tax the buyer owes. Therefore, Pennsylvania created the Motor Vehicle Understated Value Program (MVUVP) to add extra sales tax when a car is sold too far below value.
According to the MVUVP, the Department of Revenue will calculate sales tax based on the vehicle’s fair market value rather than the purchase price.
Private Sales vs. Dealer Purchases
Used car sales tax in PA is due on all used vehicles, whether purchased through a private seller or a car dealership.
When you purchase a used car from a dealer, you will pay sales tax at the time of purchase. The dealer will fill out paperwork on your behalf for a new title and registration. This makes the process more convenient, and you won’t need to do anything else other than wait for your documents to arrive in the mail.
The process is slightly different for a private purchase. You are responsible for filling out the new title and registration paperwork. Therefore, when you submit your application, you must pay the sales tax before receiving your title or registration.
Exemptions and Special Considerations for Used Car Sales
There are few exemptions and special considerations for used car sales tax in Pennsylvania. The easiest way to get a partial exemption is to trade in another vehicle toward your purchase. During trade-in sales, sales tax is only paid for the difference between the trade-in vehicle’s value and the new vehicle’s purchase price.
If you receive a vehicle as a gift, you may also qualify for a sales tax exemption by filling out an Affidavit of Gift. You must also prove that the purchaser paid sales tax when they originally purchased the vehicle. Or you may pay tax on the vehicle’s fair market value.
What Out-of-State Buyers Need To Know About Sales Tax in Pennsylvania
If you purchase a vehicle outside of Pennsylvania to bring back to the state for registration, you must still pay Pennsylvania sales tax. If you pay sales tax to another state, the amount is credited toward your total sales tax amount. For example, if you pay a 5% sales tax in another state, you must pay the remaining 1% owed in Pennsylvania.
Step-by-Step Guide To Estimating Used Car Sales Tax in Pennsylvania
For simple used car purchases, follow these steps to estimate your sales tax:
- Determine the vehicle’s purchase price
- Multiply the purchase price by .06
- Complete the calculation to estimate the sales tax
If you’re in Allegheny County or Philadelphia, you should multiply the purchase price by .07 or .08, respectively. If you purchase your vehicle out of state, you should deduct any sales tax that you paid in the state of purchase.
For trade-in purchases, use the following steps to estimate your sales tax:
- Determine the value of the trade-in vehicle
- Determine the full purchase price of the new vehicle
- Subtract the trade-in value from the purchase price to figure the difference
- Multiply the difference by .06 to calculate the sales tax amount
Meeting State Requirements When Registering a Used Car
After you purchase a used car, you must apply for a new title and register your vehicle. If you buy from a dealership, these tasks will be completed for you at the time of purchase. Private buyers must submit the registration application to the DMV or agent.
You will need:
- The original title with the assignment made out to you
- Photo ID
- Proof of Pennsylvania car insurance
You must pay the registration fee, apply for a new title, and pay the title fee, which can all be completed simultaneously.
Compare Car Insurance Rates for Your New Vehicle
Pennsylvania auto insurance is required for all vehicles. Your policy options will vary by ZIP code, driver profile, and vehicle details.
Use EverQuote’s free online quote comparison tool to compare custom car insurance quotes after your vehicle purchase.