How do you get around sales tax on a car?

If you live in a state that doesn't charge sales tax, but you plan to move to one that does, consider buying your car before moving to another state. New Jersey collects a 7% state sales tax rate on the purchase of all vehicles. For example, if you buy a car in a state where there are no sales taxes, you'll still have to pay the sales tax from your home state, plus any taxes that the local government may collect. In addition to state and local sales taxes, there are a number of additional taxes and fees that car buyers in New Jersey can pay.

Most state and local governments add sales tax to the cost of goods and services to help fund things like road maintenance, fire departments, schools and recreational activities. This way, you can use the savings you receive to pay your sales tax or personal property tax bill (unless you were able to buy tax-free as stated above, and then all the savings are just savings). If your state of residence doesn't have sales taxes, but you're moving to a state that does, buy your car before you move. Most tax-free options don't actually avoid paying taxes, but rather act as a refund of taxes paid.

To calculate the amount of tax you'll pay, simply convert the percentage of the tax rate to a decimal and multiply it by the purchase price. However, if you purchase your vehicle 90 days before the move, you may be able to avoid paying car registration taxes in the new state of residence.

Glenna Penrod
Glenna Penrod

Freelance web fanatic. Avid coffee evangelist. Professional internetaholic. Proud travel fanatic. Incurable writer.