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Every car sale in
Alabama
has a 2% sales tax applied to it, but the total amount of sales tax you’ll pay depends on which part of the state you live in. The local taxes can be as high as 3.5%, and the average total sales tax in Alabama is between 3.375% to 4%.With the already sizable price tags on vehicles, it’s hard to remember that additional fees need to be factored into your budget. With sales tax, dealer fees, and more, you’ll end up paying for much more than just a driving machine by the end of the purchase.
Sales tax is one of the most influential factors in a vehicle’s cost, and it’s a variable that depends on each state’s regulations. While Alabama has lower tax rates at the state level, county-level taxes can vary. That’s why it’s essential to know how the sales tax stacks up in your neck of the Heart of Dixie.
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4.7/5 rating on the App Store | Trusted by 5+ million customers and 7 million cars4.7/5 app rating | Trusted by 5M+ driversHow much is the car sales tax rate in Alabama?
In Alabama, the state has a baseline sales tax of 2%. That amount applies to all car purchases, whether they’re new or used models.
The tax fun doesn’t stop there, though. You’ll still need to pay county or local tax in addition to that 2%.
The lucky folks in Arab, Alabama only have to pay an additional 0.5% in taxes since Marshall County does not charge a county tax. However, Foley residents must pay 1.25% in taxes for Baldwin County plus Foley’s 0.50% locality tax. As you can see, it adds up fast!
How are car trade-ins taxed in Alabama?
A potential sales tax hack is to
trade in your car
in exchange for an applied credit to a new vehicle
in Alabama. Since dealerships allow you to get credit for your trade-in, you’ll have a lower sales tax rate applied to the new vehicle you’re buying—even if it’s pricey.For instance, if you’re purchasing a new Toyota Camry for around $25,000 and the car you’re trading in is worth $5,000, then your local sales tax will only be applied to the $20,000 difference. When buying a car, every penny in savings counts!
How to calculate sales tax on a car in Alabama
Preparation is key, and we don’t want you to feel shocked when you see that sales tax amount added to your new car purchase. Luckily, there’s a
handy calculator
to help you draw up the numbers for your car purchase in Alabama based on your zip code.Key Takeaway: You can find out what the sales tax in your area will be by adding the statewide 2% tax with your local area’s sales tax.
Exemptions from Alabama car sales tax
No matter where or how you purchase a vehicle in Alabama, you can anticipate having a sales tax tacked on to its total price. There are always exceptions to the rule, although they’re few and far between in Alabama.
If you qualify for an exemption, you must apply for a
Certificate of Exemption
that allows you to make purchases tax-free. Exemptions may include:- Charitable organizations
- Non-profits
- Sales made outside the city and/or county where a dealership is located
You can verify your status with the state’s My Alabama Taxes (MAT) website.
How to estimate Alabama tax, title, and registration fees
Don’t you wish sales tax was the only additional fee you had to worry about? Along with taxes come title,
registration
, and documentation fees. You’ll also need to pay to have your license plate transferred over at the dealership before you can drive off into the sunset.Before you break out the ‘ole T9 calculator, take a look at how these numbers could shake out:
Cost | Average cost |
|---|---|
Sales tax | 4.0% |
Registration fee | $15 to $23 and $50 annually |
Title fee | $18 |
Plate transfer | $1.25 |
Documentation fee | $485 |
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How to find affordable car insurance in Alabama
The final piece of your car-pricing puzzle will be finding car insurance for your purchase.
While rates in Alabama can be high depending on your zip code, they don’t have to be. The
car insurance
gurus behind Jerry
will have your back throughout the insurance shopping process.With a speedy, 45-second sign-up, Jerry sources the most competitive
car insurance quotes
from over 50 top insurance companies. You’ll get situated with a new, affordable policy of your choosing within minutes, and Jerry will handle all the usual hassles for you.“I can’t thank theJerryapp enough! They saved me $160 a month, and I didn’t even have to talk over the phone. They took care of everything through text.” —Travis Y.
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FAQ
How much is sales tax on a used car in Alabama?
With a statewide base sales tax of 2% on both used and new vehicles, you can add that to the sales tax rate at the local level to project your combined sales tax rate.
Reviewed by Shannon Martin.
- How much is the car sales tax rate in Alabama?
- Exemptions from Alabama car sales tax
- How to estimate Alabama tax, title, and registration fees
- How to find affordable car insurance in Alabama
- FAQ
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