Car Sales Tax in Alaska

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If you’re buying a car in Alaska, you’re in luck—it’s one of few states to have a 0% statewide sales tax on all car purchases. However, local governments can apply a sales tax of up to 7.5%, which makes the average combined sales tax a moderate 1.803%.
Car shopping comes with a lot of moving parts—and costs. Although being prepared with a budget for a particular model is a great step, it sometimes doesn’t factor in the added expenses on the vehicle’s price tag. Sales tax can increase your initial payment significantly, but the amount varies depending on where you live.
Alaska is fortunate to be on the lower end of the sales tax spectrum—but to know where you fall on its grid, you need to put your finger on the rates in your zip code. Here to help you nail down the sales tax rates near you is the
trustworthy super app
car insurance
In this detailed guide, you’ll be able to project exactly how much you’ll pay in sales tax for your vehicle in Alaska—plus how you can save on your Alaska car insurance costs!
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How much is the car sales tax rate in Alaska?

The Last Frontier is one of the best places to avoid high sales tax rates, with a statewide tax of 0%. That means you’ll be starting with an affordable baseline in comparison to most areas in the country. That doesn’t exempt you from sales tax at the local level, though.
That’s especially true if you’re a Kenai Peninsula Borough resident. More particularly, Alaskans living in the city of Homer are under the thumb of the state’s highest sales tax rate of 7.85%. Thankfully, Homer is an anomaly in Alaska, since the majority of cities stick to, or close to, the sales tax rate of 0%.

How are car trade-ins taxed in Alaska? 

Alaskans like to keep things simple, especially when it comes to sales tax. Since most local governments don’t apply sales tax to any vehicle purchases, trade-ins are no different. 
However, the local governments with state tax rates higher than 0% will apply their specific amount to trade-ins. The bad news? Trade-in credits aren’t applied to car sales in Alaska—so even if you earn a trade-in credit, you’ll be taxed on the full-priced new model.

How to calculate sales tax on a car in Alaska

With the help of Alaska’s DMV, it’s simple to calculate the total sales tax on your car purchase.
Instead of betting on your area falling into one of the 0% sales tax cities in Alaska, you can use this
online tool
to find out how much you’ll pay based on where your car purchase will be.
Key Takeaway Find out the sales tax rate at the local level near you in Alaska to determine the combined sales tax you’ll be paying.

Exemptions from Alaska car sales tax

While a substantial amount of Alaskans are exempt from sales tax by default, some residents in areas with local sales tax rates can be absolved from them, too. By filling out a form through your
local DMV
, you can file for a sales tax exemption if you fall into any of these categories:
  • You hold a permanent registration
  • You represent a charitable or church organization
  • You have a disability
  • You’re active in the military and stationed in Alaska
  • You’re a senior citizen
  • You’re a member of an Alaska Tribal Village Council
You can find out more information about your eligibility for tax exemption on the
DMV website

How to estimate Alaska tax, title, and registration fees

Car sales tax can be minimal in Alaska, but that doesn’t mean you’ll be free from additional purchase fees for your vehicle. When determining your budget, it’s a good idea to factor in costs for the title, registration, license plate transfer, and documentation
Let’s take a look at how those costs stack up for Alaskan dealerships:
Average cost
Sales tax
Registration fee
Title fee
Plate transfer
Documentation fee
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Keep in mind that you have the power to negotiate at the dealership, and you can specify a “drive it away” fee that eliminates the guessing game at the end of your purchase. 

How to find affordable car insurance in Alaska

With some of the lowest tax rates in the country, you can get a break on your car purchase in Alaska. Once you sign off on a new ride, you’ll need to protect it with car insurance—which isn’t always as easy to lock down for cheap prices. 
With the
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Used cars and new cars are treated equally under a sales tax lens, so you can apply the 0% statewide sales tax rate and your local government’s sales tax rate to your purchase.
By Kaitlin May
Expert Insurance Writer
Reviewed by Jessica Barrett.
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