Is It Required?

• Even though the car is used, you still have to pay sales taxes on it in most states. Buying a used car is just like buying any other used or new item requiring sales tax. In fact, in most cases you can't register the used car until you pay the sales tax on the car purchase. When you buy a used car, whether it's from a dealer or private party, you need to get a bill of sale that proves the final amount you spent to buy the car.
  
  

Calculating Sales Tax

• Calculating the sales tax due on the car is a simple matter of multiplication. Take the final sales price listed on the bill of sale and multiply it by your state sales tax rate. Keep in mind that the sales tax rate may vary depending on the county you live in within your state. So for instance, if your final price for the used car was $2,000 and your total sales tax rate for the area where you live is 7.5 percent (.075 in decimal format), you must pay $150 in sales tax (2,000 x .075).
  
  

How to Pay

• In most cases you need to pay the sales tax for your used car at your local department of motor vehicles (DMV) office. Take the car title, your license, the bill of sale and a check or money order to cover the sales tax to your local DMV. Fill out applicable registration forms and pay the cashier the correct tax fee. You'll commonly receive temporary registration paperwork as you await your actual plates for the used car after handling this business.
  
  

Deducting Sales Tax

• You may have an opportunity to deduct the sales tax expense related to your used car purchase on your taxes. In some cases, you're given the option to deduct the total sales tax you paid during the year instead of your state income tax as an itemized deduction on your return. When you buy a used car and pay applicable taxes that could afford you a significant deduction. The rule may change depending on the tax year, so check your tax forms thoroughly before taking the sales tax deduction.