Before heading to the dealership to purchase your new vehicle, it is essential to prepare your budget; within the costs, you must consider the tax on automobile sales imposed by the state.
In Virginia, the tax starts at 4.15%, but at the state level, it can be as high as 7,5%. Therefore, before proceeding with your purchase, you should be aware that you can be responsible for the additional taxes on the investment.
Who pays vehicle sales tax in Virginia?
All automobiles registered to a city or county address in Virginia must legally pay vehicle sales tax. Many people have decided to inscribe their cars in other states.
However, it is an illegal action that can cause you a lot of inconvenience in the future. To avoid committing a crime, you can evaluate if you qualify under any of the regulations for vehicle sales tax exemptions; you can opt for it in the following cases:
- Vehicles sold to a local, state, or federal government agency
- Vehicles sold and registered to a member of a recognized Native American tribe in Virginia, such as the Mattaponi and Chickahominy tribes
- Automobiles purchased in a different state at least 12 months ago with proof of prior taxation
- Whether there is a wide variety of precise donations or transfers
The Virginia Vehicle Sales Tax Rate
As mentioned earlier, the standard Virginia tax is 4.15% on automobile purchases. However, counties or local municipalities are free to increase the rate by up to an additional 2.7% on top of the original tax.
James City and York County have a maximum tax rate of 7%; major cities in the Commonwealth, such as Virginia Beach, Chesapeake, and Norfolk, have a tax rate of 6%.
The lowest rates are in the northeastern counties, where the tax rate can be as low as 5.3%. Likewise, before proceeding with the purchase, you should make sure you know the rate at which you will pay the tax at the dealership; they may also have additional costs.
How are Vehicle Trade-ins Taxed in Virginia?
If you have an old vehicle and want to purchase a current one, you can trade it in; in the state of Virginia, you must pay tax on the original value of the car you are about to purchase.
Let’s take as an example that your old vehicle has a credit of $3,500 and the new one has a value of $28,000 in Suffolk; in this place, the tax on the sale of vehicles is 6%. Although the price of the new car would drop to $24,500 because of the trade-in, the tax is adjusted to the original value so that the total purchase would be $26,180.
In Virginia, the trade-in will not positively affect the taxable value of your new vehicle purchase, but manufacturer incentives and rebates do have good options.
Considering the above example, if your new car gets a reduction from $28,000 to $24,500 because of the trade-in, after applying the manufacturer’s incentive or rebate, you will only pay 6% on the reduced value, i.e., the total will be $25,970.
How do I calculate taxes, registration fees, and title in Virginia?
Virginia vehicle sales tax is not the only amount you need to know to calculate your car’s final calculation. You must pay state-imposed registration, titling, and license plate transfer fees when buying your vehicle.
In addition, the dealership usually has special fees for documentation. To get an idea of what you should pay, here are some of the approximate values:
- Sales tax: 5.624%
- Title fee: $15
- Registration fee: $30.75 / $109
- License plate transfer: $10
- Documentation fee: $490
For the new registration, you must go to the corresponding entity to request the fee according to the type of car you purchased; most of them have a price between $30.75 and $35.75. Now, if it is an electric car, the fee will be $109.
Avoid any inconvenience or setback by communicating with the professional agents that will guide you during the purchase; this allows the process to be faster and fewer setbacks along the way.