If you're looking to purchase a car in Massachusetts, you probably want to know how to best calculate the sales tax on your vehicle. Sales tax is a tax levied by federal or state governments on certain purchases within their jurisdiction on top of the agreed-upon price for that item. Most vehicle sales are taxed by the state rather than the federal government. If you're a resident purchasing a car in-state, sales tax is a straightforward calculation.
Massachusetts Car Sales Tax Calculator
According to Car and Driver, the state of Massachusetts collects a sales tax of 6.5 percent on all vehicle sales in the state. If you're buying a new vehicle, the calculation will be easy. Say your new vehicle is priced at $12,000. Your sales tax payment will be ($12,000) x (0.065) = $780, making the total cost for that vehicle $12,780. Repeat this calculation with the cost of whatever vehicle you're looking at, and you'll be able to calculate straight sales tax.
Video of the Day
If you have additions to the purchase, however, your sales tax will be calculated differently. For example, many dealerships will let you trade in an older car toward the purchase of a new one. In Massachusetts, the value of your old trade-in can be subtracted from the value of the new car, which saves you sales tax. For example, if your trade-in is worth $3,000, the end price of the new car is ($12,000) - ($3,000) = $9,000, and sales tax will be ($9,000) x (0.065) = $585.
On top of trade-in value, many dealerships offer rebates or other incentives to encourage people to purchase a vehicle. In Massachusetts, these dealership offers are also removed before taxes are collected. So, if your trade-in is worth $3,000 and the dealership offers a cash rebate of $1,000, your new car will cost ($12,000) - ($3,000 + 1,000) = $8,000, and final sales tax will be ($8,000) x (0.065) = $520.
Additional Charges in Massachusetts
Keep in mind that the purchase of a car doesn't only involve the car's value. After the vehicle purchase costs plus sales tax has been calculated, there can be several other fees applied to register the car within the state. According to Ever Quote, normally, a Massachusetts title costs around $75, while the vehicle's registration fee can be anywhere between $20 and $100. If you're transferring plates from an old car, there'll be a $25 processing fee.
On top of this, the dealership is likely to add documentation or processing fees to the paperwork that's required to prepare the contract and tax documents. On average, Massachusetts buyers can see dealer fees around $350, on top of the legally required fees.
Out-of-State Vehicle Taxes
If you've purchased a vehicle somewhere that isn't registered within the state of Massachusetts, you may owe additional taxes. For example, out-of-state buyers who move to Massachusetts may need to pay an additional use tax based on the difference between the Massachusetts tax rate and the tax rate in the state of purchase. The Massachusetts car sales tax itself won't change based on where you live, however.
Other vehicles purchased outside of registered entities will need to use the National Automobile Dealers Association site (NADA) to determine the fair trade-in value of the car. Vehicles that are worth more than the net purchase price may need to pay additional sales tax based on that difference.