What’s the Sales Tax on Cars in New York?

How much is the sales tax on cars in New York?

The Empire State tops the states of the USA when it comes to levying income and property tax. With respect to sales tax, the picture is relatively better as NYS imposes 4% sales tax, which is below national average 5.95%.

But that doesn’t mean while purchasing a new or used car you need to pay the price of the car and this sales tax on cars in New York only. In addition to this state tax rate, cities and counties also levy taxes which add up to increase the original sales tax rate manifold. This is called local sales tax and unfortunately, NY is among the 5 states, which impose the highest rate of local tax.

Local tax rate in NYS is 4.48%. In short, to enjoy driving your newly bought car, be prepare to pay 8.48% (= 4+4.48) sales tax on cars in New York. So, if you are buying, say, a $50,000 worth car, you must be prepared to pay $50,000 x 8.48%= $4240 as sales tax on cars in New York.

The problem is that this 4.48% local tax is an average. Different counties levy different rates which makes it difficult to calculate how much it would cost you actually. Once you enter your zip code, this tool of Department of Finance and Taxation will help you to determine your combined sales tax on cars in New York. Then just multiply the rate with the sale value of your car and you will get the amount. Remember, if your dealer offers any discount on the price of the car that is not included in the tax calculation. Sales tax on cars in New York is calculated depending upon the price of the car without discount.

Why is the sales tax on cars in New York that high?

You must be annoyed that you have to pay such a big amount of money just for tax purpose, while car owners in other states (Alaska, New Hampshire etc.) are going free. The reason behind this is more political than anything else. The state government explains this high sales tax on cars in New York and on any commodity you purchase here, by means of revenue requirement. Different states have different requirements and they levy taxes accordingly. It is said that people of NYS prefer to pay high taxes rather to suffer from poor infrastructure.

Other reasons to support high sales tax in NYS are

Relatively higher paying standard of the state, particularly of the Upstate NY
Huge expenditure for removing snow
Cost of maintenance of roads after winter
Burden to support senior citizens and veterans etc.
Deficit in State budget

Who doesn’t know that Democratic politicians are known for tax and spend policy? This explains quite well why tax burden is in general high in NYS.

How to avoid paying sales tax on cars in New York

By now, you must have decided to buy your next car in another state which has low sales tax on vehicles. Let me tell you my friend there is no go. Being a NY resident, there is no way you can avoid sales tax on cars in New York. The Department of Motor Vehicle (DMV) has the anticipation that people are likely to buy cars from states with low tax rates to save some money. That’s why they haven’t kept the option open.

They have made the rule such that you need to pay taxes when you register a newly bought car and not when you actually buy a new car. Staying in NYS, if you plan to buy a new or used car in New Hampshire, where there is no sales tax, this doesn’t make any difference. You have to pay the tax when you will return back to NYS with the car and try to register it in NYS. No matter in which corner of the world you buy a vehicle, when you register it in NYS, you have to pay NYS taxes. The only way you can skip paying this tax is to register it in a low or no sales tax state; but for that you need to reside there.

Additionally, there are other complications. An out of state purchased vehicle needs to conform to the emission standard of NYS in order to get registration in NYS. If your vehicle doesn’t fulfill the requirements, you are obliged to pay extra for modifications. More over, an out of state purchased car needs to go through Vehicle Identification Number verification, which costs extra money.

The moral of the story: Don’t try to be tricky with DMV; better pay the sales tax on cars in New York.