Texas Car Sales Tax: What You Need to Know (2024)

Texas has a statewide sales tax of 6.25% that applies to all car sales. The average tax on car sales including local and county taxes in Texas is 7.928%.
Written by Matt Nightingale
Reviewed by Jessica Barrett
has a statewide sales tax of 6.25% that applies to all car sales. Local and county taxes are also applied to car sales and add about another 1.67% to the price of your purchase. If you’re buying a car in Texas, you can expect the car sales tax to be about 7.92% on average.
Many car buyers become hypnotized by the sticker price on the car and forget about the many additional costs associated with
buying a new car
. The biggest additional cost is sales tax, and how much sales tax you pay will depend on where exactly you buy your car.
Texas’ car tax rate ranks among the heftier in the country. The exact amount of tax you pay on your car purchase will vary depending on which county—and even which city—in Texas you buy it in. Local and county tax rates range between 0-2% on top of the statewide 6.25% sales tax.
If you’re in the market for a new vehicle,
car insurance
has compiled everything you need to know about car sales tax in the Lone Star State.

How much is the car sales tax rate in Texas?

All purchases in Texas are subject to a statewide 6.25 sales tax. This tax applies to all car sales, new and used. Depending on where you purchase your car, you may have to pay county and local taxes on top of that.
You’ll find the highest car sales tax rates in Texas are in:
Each of these cities charges an additional 2% county sales tax, for a total tax on car purchases of 8.25%. 
There are a few counties that charge no additional taxes beyond the 6.25% state sales tax, including King County and Borden County. The average sales tax rate in Texas is about 7.92%.
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How are car trade-ins taxed in Texas?

Some dealerships will allow you to trade in your old vehicle for credit to be put toward your purchase. In Texas, the value of your trade-in vehicle is not subject to sales tax. This helps save you money by reducing the taxable amount of your purchase.
Imagine for a moment you’re purchasing a Kia Soul in Austin for $23,000, and wish to trade in your Ford Fusion for a credit of $5,000. That $5,000 credit is taken off the price of the Kia Soul and you’ll only pay the 8.25% sales tax on $18,000.
Keep in mind that dealer incentives and rebates are not exempt from state and local sales taxes. These are applied after tax. So, if your dealer is offering a rebate of, say, $3,000 on the purchase of a $23,000 Kia Soul, you’ll still pay the car sales tax on the full $23,000 value of the purchase.

How to calculate sales tax on a car in Texas

There are lots of online resources available to help you calculate sales tax so that you don’t have to do the complicated math in your head. If you know the value of the vehicle you’re looking to purchase, you can enter that amount into an online
sales tax calculator
and select the city and zip code where you’ll be making the purchase. 
If you’re not sure of the vehicle’s value, the
Texas Department of Motor Vehicles’ website
provides a calculator that helps estimate the value of a car based on the car’s
vehicle identification number
and odometer reading.

Exemptions from Texas car sales tax

Generally speaking, most car purchases are subject to car sales tax in Texas—though there are some exceptions. Vehicle purchases that are exempt from Texas sales taxes include those purchased:
  • By a public agency
  • To be leased to a public agency
  • For law enforcement activities
  • To be used exclusively out of state
  • To be modified for use by a person with orthopedic disabilities
Contact the Texas Department of Motor Vehicles to see if you qualify for a car sales tax exemption.

How to estimate Texas tax, title, and registration fees

Sales tax is typically the biggest additional expense you’ll encounter when buying a car—but it’s not the only one. Other costs that you’ll need to watch out for include fees for registration,
title transfer
, and plate transfer.
Here’s a breakdown of the additional fees you’ll encounter when purchasing a car in Texas:
Average cost
Sales tax
Registration fee
$42.80 to $60.80
Title transfer fee
Plate transfer
Your dealership may also charge a documentation fee, which is separate from the taxes and fees discussed above. This fee covers the cost of preparing and filing the sales contract. Texas does not limit how much dealerships can charge for documentation fees, but the average doc fee runs about $135.
And lastly, don't forget car loan payments. If you purchase a vehicle using a
car loan
, you will also have to account for those charges in your budget!

How to find affordable car insurance in Texas

Now that you’ve paid all your taxes and fees, there’s one last thing you’ll need to buy: car insurance. In Texas, drivers are
required by law to carry car insurance
with at least $30,000 in liability coverage for each injured person, $60,000 for
bodily injury
liability per accident, and $25,000 for
property damage liability
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The average amount of sales tax charged on car purchases in Texas is 7.928%.
The biggest additional fee on car purchases is the sales tax. In Texas, you can also expect to pay fees for title transfer, plate transfer, registration, and documentation.
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