Indiana Vehicle Sales Tax: What You Need To Know In 2023

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Understanding the Basics

When purchasing a vehicle in Indiana, it’s important to understand the vehicle sales tax. This tax is imposed on the purchase price of the vehicle and is paid at the time of registration. The sales tax rate varies depending on the county you reside in and can range from 6% to 7%. It’s crucial to factor in this tax when budgeting for your new vehicle.

Exemptions and Exceptions

Trade-In Credit

Indiana offers a trade-in credit that can reduce the sales tax you owe. If you trade in a vehicle when purchasing a new one, the value of your trade-in will be deducted from the purchase price. The sales tax will then be calculated based on the reduced price, potentially saving you money.

Out-of-State Purchases

If you purchase a vehicle out of state but plan to register it in Indiana, you may still be required to pay the sales tax. However, Indiana offers a credit for sales tax paid to another state. You can provide proof of the tax paid to receive a credit, reducing the amount owed in Indiana.

Calculating the Sales Tax

To calculate the sales tax on your vehicle purchase, you can use the Indiana Department of Revenue’s online calculator. This tool allows you to input the purchase price, county of residence, and any applicable trade-in credit to determine the amount of sales tax you owe. It’s a handy resource to help you plan your budget accordingly.

Additional Fees

Aside from the sales tax, there may be additional fees associated with registering your vehicle in Indiana. These fees can include title fees, registration fees, and excise taxes. It’s important to inquire with the Indiana Bureau of Motor Vehicles to get an accurate estimate of these additional costs.

Tips for Saving Money

If you’re looking to save money on your vehicle purchase, consider the following tips:

Shop Around

Compare prices at different dealerships to ensure you’re getting the best deal. Don’t hesitate to negotiate, as dealerships may be willing to lower the price or offer additional incentives.

Consider Buying Used

Used vehicles often come with a lower price tag and may be subject to reduced sales tax. Explore your options and consider purchasing a reliable used vehicle to save money.

Utilize Trade-In Credit

If you have a vehicle to trade in, take advantage of the trade-in credit to lower the purchase price and ultimately reduce the sales tax owed.


Understanding the Indiana vehicle sales tax is essential when purchasing a vehicle in the state. Be sure to factor in the sales tax rate, consider exemptions and exceptions, and utilize resources like the online calculator. By staying informed and exploring money-saving tips, you can make an informed decision and save money on your next vehicle purchase.