How to Waive Car Sales Tax

Sales tax on a car is often collected by the state's department of motor vehicles when the car is registered or title is transferred. In some cases, the sales tax on a new or used car can be waived or reduced, depending on the state in which you purchased or registered the car. Sales tax is a significant source of revenue for your state, if it has a sales tax, so finding a way out of paying it can be challenging.

Step 1

Give a car to someone or have it given to you as a gift. If a car is given as a gift from a member of your family, in most states, the sales tax is waived.

Step 2

Purchase a car that is considered to be environmentally friendly. Cars that are very economical on gas or are hybrids often qualify for tax credits or sales tax waivers, although you often have to pay the tax upfront and then get a refund later.

Step 3

Purchase a car in a state that does not have sales tax or in another state. If, for example, you live in Vermont, which has sales tax but purchase your car in New Hampshire, the sales tax will not apply.

Step 4

Contact the Internal Revenue Service after purchasing your car. New legislation often goes into effect that allows certain sales taxes to be waived on certain items, such as alternative fuel vehicles.

Step 5

Look for temporary state sales tax waivers. In time of financial crisis, economic downturn or natural disasters, sometimes a state legislature will waive the state sales tax in order to encourage the purchase of some items. Often called a "sales tax holiday" it can help those who can't normally afford a new or used car to get one.

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