If you’re anything like us, the thought of purchasing a new vehicle is very exciting. But one thing you must know before you drive off the showroom floor is that you’ll be required to pay sales tax on your car purchases.
Each year, just under one million vehicles are sold in Utah, and each of these new owners will have paid sales taxes based on their local county’s tax rates.
At this point, you may be wondering what your sales tax rate would be on a vehicle purchase and how to calculate this figure.
In this article, we will unpack:
💸 What sales tax in Utah is.
💸 How you can calculate sales tax in Utah.
💸 The other fees you will need to pay when you purchase a car.
💸 Tips for lowering your Utah sales tax.
What Is Car Sales Tax?
If you purchase a car in the U.S., you will be required to pay taxes on the transaction. This amount is added to the total cost of the vehicle. This also applies to leasing a vehicle.
The average rate for sales tax in Utah is 6.9 percent.
To give you an idea of what this means, here are the car sales tax rates in some other states:
Source: World Population Review
Certain cities and municipalities in Utah can collect sales tax at various rates. The exact taxable amount will depend on the car you buy, its age, and the purchase price.
It’s worth noting that car sales tax is separate from several other fees car buyers will need to pay along with their purchase. These can include dealership documentation fees and registration fees—which we will discuss later in this article.
Utah tax on vehicle purchases or leased cars is usually collected by the dealership or the seller. It is then remitted to the government.
How to Calculate Sales Tax in Utah
To find out the exact amount of taxes and fees you’ll pay on a particular vehicle, you would need to contact the Utah Department of Motor Vehicles (DMV).
However, there are some reliable calculators that you can find on the web to determine your final amount. Be sure to choose a Utah sales tax calculator that considers the specific regulations for the state.
Here are the general steps you can take to calculate the tax you’ll pay for your purchase.
➡️ Step 1: Determine the sales tax rate
You need to find out the precise sales tax rate in the county where you purchase the vehicle.
➡️ Step 2: Find out what the car purchase price is
Next, you will either need to find the car you want to purchase or have a rough idea of the purchase price for the vehicle you have in mind.
➡️ Step 3: Multiply the purchase price by the county tax rate
We’ve found that the average county sales tax rate is 6.96%. To calculate your car sales tax, you would need to multiply the final purchase price by .0696%.
➡️ Step 4: Subtract your trade-in amount and rebate
You would then need to subtract your trade-in amount and the dealer or manufacturer rebate from the purchase price.
Often, car dealerships in Utah will offer something called dealer incentives or rebates with the purchase of a vehicle.
Certain car manufacturers also offer rebates.
If you qualify for incentives or rebates, the state will only tax the vehicle after the rebate is applied.
Trade in credit
Many dealerships will allow you to sell them your current car in exchange for trade-in credit. The trade-in value is not subject to sales tax.
➡️ Step 5: Multiply the final figure by the tax rate
You’ll now need to multiply your amount by the 0.696% tax rate we determined earlier. This calculation will tell you how much your sales tax will be.
|🤔 An Example of Sales Tax in Utah
Let’s say the final purchase price of the vehicle you want to buy is $30,000, and you’ve determined that the sales tax rate is 6.96%. For this example, we’ll use a trade-in amount of $5,000, and your dealership and manufacturer rebates are $2,000.
In this case, your sales tax would be calculated on the purchase price minus your trade-in amount and the rebates. This amount then needs to be multiplied by 0.696.
Here’s the formula:
Sales tax = ($30,000 – $5,000 – $2,000) x 0.0696
In this example, your final sales tax would be $1,600.80.
Is Sales Tax Applicable to a Used Car?
Although the price of a used car will typically be less than a new vehicle, you are still required to pay your county sales tax rate.
Of course, your purchase price will be lower, which will mean your total sales tax will be lower.
So, buying a used car and paying less sales tax might make sense if you’re on a budget.
|🤔 What About Trade-Ins?
In Utah, you don’t need to pay sales tax on a car that you are trading in.
What You Need to Know About Other Fees
The total cost of your vehicle doesn’t end with sales tax. There are several other fees you’ll need to take into account if you’re considering purchasing a vehicle, including:
➕ Doc fees
Dealerships may charge a documentation fee which covers the cost of preparing and processing all the documents related to the sale.
The average doc fee is about $300 in Utah, but these fees vary based on the dealership.
Here are some examples of fees and what you can expect to pay:
|Plate transfer fee||$6|
|Annual automobile education fee||$2.50 per year|
|Annual uninsured motorist identification fee||$1.00 per year|
➕ DMV fees
You will need to pay the Utah DMV a registration fee and some potential additional taxes.
According to the DMV website, you can also expect to pay:
- Renewal fees.
- A corridor fee.
- An air pollution control (APC) fee.
Who Qualifies for a Sales Tax Exemption in Utah?
Certain individuals are exempt from paying Utah sales tax. You will not have to pay tax on a car in the following circumstances. If you:
✅ Receive a vehicle as a part of a divorce settlement.
✅ Receive a vehicle as a gift from family members.
✅ Inherit the vehicle or if you receive it from someone’s revocable trust.
✅ Are a disabled veteran.
✅ Use certain farming vehicles.
If your vehicle purchase doesn’t fall into any of the above situations, you will be required to pay local sales tax rates on your car.
Does Utah Have an Electronic Vehicle Incentive or Rebate?
If you purchase an electronic vehicle (EV) in Utah, you will not receive any incentives. However, you may qualify for a credit of up to $7,500 from the Federal government.
This only applies to certain vehicles, and you will need to check your eligibility.
For example, the battery in the vehicle must be at least seven kilowatts per hour (kWh) for you to qualify for an incentive.
The Best Places to Buy a Car in Utah
You might want to aim for a specific county when it comes to your new car purchase. This is because sales tax rates are different from one country to another.
Here are some examples to consider:
👉 Park City in Summit County has the highest tax rate in Utah at 9.05%.
👉 Wayne County and Piute County have the lowest sales tax rate of 6.1%.
👉 Salt Lake City falls in between these two counties with a rate of 7.25%
These are the approximate car sales tax rates for other popular car-buying hot spots in Utah:
|County||Sales tax rate|
How to Pay Less Car Sales Tax
Unfortunately, unless you fall into one of the scenarios that qualify for a tax exemption, it’s likely you will have to pay tax on a car you buy in Utah.
|🤔 Buying In States Without Sales Tax Won’t Work
You might think that purchasing a car in a state that doesn’t charge sales tax—such as Alaska or Delaware—will mean you won’t have to pay tax. But this is not the case.
The amount of tax you pay is determined by the state where you register a car, not where you buy it.
So even if you travel out of state to buy a car, you will still have to pay Utah’s sales tax.
The only way to take advantage of a state that doesn’t charge sales tax is to actually live there. And even then, a local government may still add its own tax to the purchase.
The conclusion? Utah sales tax is pretty much unavoidable.
However, there are some points you can consider when purchasing a vehicle that may save you on your car sales tax.
💰 Negotiate your purchase price
You may have more leeway when purchasing a car from a dealership than you may think. Negotiating with them regarding the car’s total purchase price will naturally lower your Utah sales tax.
💰 Trade a vehicle in
As mentioned earlier, selling a car to a dealership while purchasing a new one can result in full trade-in credit—which will be deducted from the purchase price of your new car before sales tax is applied.
💰 Invest in an EV
As we’ve explained, you are entitled to a certain federal government tax credit if you buy an electronic vehicle. Buying an EV isn’t just good for the planet; it’s good for your pocket too.
💰 Keep your car well-maintained
Investing in preventive maintenance on your current vehicle will save you from buying a new car and paying sales tax. This is because maintaining your current car means it’s less likely to break down or fail to the point that it must be replaced.
Although it may seem unnecessary, spending money now on the various scheduled maintenance tasks set out by your car’s manufacturer will save you on costly repairs or buying a new car sooner than necessary.
✨ Keep Your Car In Stellar Shape with Burt Brothers
If following our advice about preventive maintenance sounds like a good idea, we’re here to help.
Scheduling an appointment for your car on our website is simple, and you can select the shop closest to you for complete convenience.
For more information on buying a car in Utah, keep an eye on the Burt Brothers blog.
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