Understanding Used Car Sales Tax in Virginia: Rates, Fees, and Calculations
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If you’re thinking of buying a used car in Virginia, make sure you prepare for all the costs. Virginia charges a used car sales tax on all vehicle purchases when you apply for the new title.
Learn more about the Virginia used car sales tax and get some tips for saving money.
Understanding Virginia’s Motor Vehicle Sales and Use Tax
Virginia collects used car sales tax on all used motor vehicles that are sold and change ownership. New vehicle owners are responsible for paying this tax when they apply for their certificate of title.
How much is sales tax on a used car in Virginia? The used car sales tax in Virginia is 4.15% of the vehicle’s gross purchase price. Virginia does account for some rebates and other price reductions to help reduce your tax bill. But you must pay a minimum of $75, regardless of purchase price.
How Virginia’s Sales Tax Affects Your Car Purchase
Purchasing a vehicle requires a lot of thought about budget. You have to plan and have an idea of how much you want to spend. Unfortunately, this includes more than just the retail price.
Car purchases can come with a lot of other fees and costs, including Virginia’s sales tax on used cars. When creating your car budget, you’ll have to estimate the 4.15% sales tax rate.
Additional Costs To Consider: Title, Registration, and Fees
Virginia has one of the lowest tax rates for motor vehicles. However, you must consider additional costs like registration fees, title fees, and license plate fees. Some counties also charge an annual personal property tax.
Title fees are set at $15 for original titles, replacement titles, and lien titles. Vehicle registration fees can range from $18.25 to $50, depending on the type of vehicle and its weight. If you want to transfer your license plates from another vehicle, the fee is $2 (or $2 plus a prorated fee if the new vehicle weighs more).
New drivers also have to pay license fees. Driver’s licenses cost $4 per year in Virginia, with a standard of eight years for $32.
Finally, you’ll need to provide proof of Virginia car insurance to register your vehicle.
Calculating Your Total Vehicle Purchase Costs in Virginia
To start calculating your purchase price, begin by subtracting any cash rebates, dealer incentives, or trade-in values. To determine your sales tax, you can subtract cash rebates and dealer incentives from your purchase price to get your gross purchase price. Multiply the gross purchase price by .0415 and add them together.
For example, let’s say you’re buying a car that costs $15,000 with a cash rebate of $1,000. Subtract $1,000 from $15,000, and your gross purchase price is $14,000. Multiply $14,000 by .0415, and you’ll pay a sales tax of $581. This is a total of $14,581 without other fees.
Your other fees can vary. Do some research to estimate your registration fees, insurance rates, and other costs and simply add them to your sales price and taxes to get the grand total.
Trade-In, Rebates, and Tax Exemptions in Virginia
Dealers may offer rebates and other incentives for vehicle purchases. Virginia allows you to deduct these from the sales price to calculate tax on only your out-of-pocket expenses. In the example above, the buyer was able to reduce the taxable amount by $1,000 by deducting the cash rebate.
Unfortunately, Virginia doesn’t allow you to deduct trade-in values. Let’s say that you trade in an older vehicle for a credit of $3,000. With a retail price of $15,000 and a cash rebate of $1,000, you’re technically only paying $11,000 out of pocket after the trade-in. However, Virginia would still calculate tax on the $14,000 gross sales price before the trade-in.
Virginia does have some vehicle sales tax exemptions. The most common is if you are transferring your title to Virginia for the first time using a title or registration from another state or the military. As long as the document is valid, you won’t have to pay the tax. If you bought the car within the previous 12 months, you’ll be required to provide proof that you paid taxes.
Navigating Virginia DMV Resources for Vehicle Purchase Guidance
The Virginia Department of Motor Vehicles (DMV) has plenty of online resources available to help you through the car-buying process. On the Vehicles page, you can find lots of information about titles and registration, Virginia auto insurance, buying and selling, and taxes and fees.
Tips To Save on Your Car Purchase and Lower Your Costs
If you’re one of the many people trying to save money on your next car purchase, try these methods:
- Save up a larger down payment. You can take out a smaller loan and save on interest.
- Buy a used car that might have lower maintenance costs.
- Trade in your current vehicle.
- Learn to negotiate with sellers.
- Look for opportunities to get a discount, like at the end of a month or year.
- Get pre-approved for financing from a preferred lender.
Find the Best Car Insurance To Protect Your New Ride
After you buy your vehicle, you will need to provide proof of insurance to register it and drive it legally in Virginia. One of the best ways to find cheap car insurance in Virginia is to comparison shop.
Insurance rates can vary by ZIP code and driver profile. Compare multiple insurance companies and view custom policy options by using EverQuote’s free online quote comparison tool.