Introduction
If you are planning to buy a vehicle in Tennessee, it is important to understand the concept of vehicle sales tax. In this article, we will provide you with all the information you need to know about vehicle sales tax in Tennessee in the year 2023.
What is Vehicle Sales Tax?
Vehicle sales tax is a tax imposed on the sale of vehicles in Tennessee. It is a one-time tax that is paid when you purchase a vehicle, whether it is new or used. The tax is calculated based on the purchase price of the vehicle.
Tennessee Vehicle Sales Tax Rate
In Tennessee, the vehicle sales tax rate is currently 7%. This means that if you purchase a vehicle for $20,000, you will have to pay $1,400 in sales tax.
Exemptions
Trade-In Exemption
Tennessee offers a trade-in exemption, which means that if you trade in your old vehicle when purchasing a new one, you will only be required to pay sales tax on the difference in price between the two vehicles. For example, if you are buying a new car for $30,000 and trade in your old car valued at $10,000, you will only pay sales tax on the remaining $20,000.
Out-of-State Purchases
If you purchase a vehicle from another state and bring it into Tennessee, you may be required to pay the sales tax in Tennessee. However, if you have already paid sales tax in the state where you bought the vehicle, you may be eligible for a credit towards the Tennessee sales tax.
Payment and Filing
Payment
The vehicle sales tax is typically paid at the time of registration or titling of the vehicle. You can pay the tax at your local county clerk’s office or through the Tennessee Department of Revenue’s online portal.
Filing
When you purchase a vehicle, the seller is responsible for providing you with the necessary paperwork to complete the registration and titling process. This paperwork will include the sales tax information, which you will need to file with the Tennessee Department of Revenue.
Conclusion
Vehicle sales tax is an important aspect of purchasing a vehicle in Tennessee. Understanding the tax rate and exemptions can help you make informed decisions and plan your budget accordingly. Remember to consult with the Tennessee Department of Revenue or your local county clerk’s office for any specific questions or concerns regarding vehicle sales tax in Tennessee.