Staying within budget can be difficult when you buy a new car. There are additional costs that can exceed your budget if they are overlooked. In particular, you should pay attention to the sales tax, which can vary depending on where the car is purchased.

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How much is the car sales tax rate in Indiana?

The statewide sales tax in Indiana is 7% and is applied to any car purchase, regardless of whether it’s new or used. The sales tax rate is the same in all 281 local tax jurisdictions across the state of Indiana.

While it is rare for all counties to have the same sales tax, this makes budgeting for your new car much simpler—you won’t have to find out the specific sales tax rate where you are!

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How are car trade-ins taxed in Indiana?

Many dealers have promotions for

trading in an old vehicle

so that you get credit towards purchasing a new car with them. In Indiana, the car sales tax only applies to the final ticket cost of your car, so the value of your trade-in won’t be subject to taxes.

For example, you’re buying a Honda Accord Sport worth $28,000 in Indianapolis, and you’re trading in your old Hyundai Veloster for a $3,500 credit. You’ll only have to pay Marion County’s 7% combined state and local sales tax on $24,500 of the purchase.

However, if you receive dealer rebates and incentives, they are not exempt from sales tax. In other words, the sales tax will still be applied to the full price of the vehicle before dealer incentives.

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How to calculate sales tax on a car in Indiana

Calculating the sales tax on a car in Indiana is simple since there is only one 7% tax across the entire state.

Exemptions from Indiana car sales tax

Although all Indiana car purchases are subject to sales tax, they are exempted if one of the following applies to you:

You are a tax-exempt organization

You are an out-of-state resident and the vehicle was purchased out of state

The vehicle is a truck directly used in the direct production of manufacturing, mining, refining, or harvesting of agricultural commodities

The vehicle is a ready-mix concrete truck that qualifies under the manufacturing machinery and equipment exemption

For more details on available sales tax exemptions, refer to the additional information on the

ST-108E Form

provided by the Indiana Department of Revenue.

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How to estimate Indiana tax, title, and registration fees

Aside from the sales tax, there are other factors that affect your total cost. This includes the title and

vehicle registration

fees, the cost to transfer your license plates, and the documentation fee charged by most dealerships. Some states also have supplemental fees for electric and hybrid cars.

Here’s a breakdown of all the additional costs associated with car purchases in Indiana:

Cost	Average cost
Sales tax	7%
Registration fee	$21.35 + $15 infrastructure fee
Title fee	$4 - $25
Plate transfer	$9.50
Documentation fee	$199 max
Electric vehicle supplemental fee	$150
Hybrid vehicle supplemental fee	$50