No one wants to talk about taxes. But you know what that kite-flying Franklin guy, Ben, said about the certainty of death and taxes. Car buyers in Utah will undoubtedly pay sales tax on their purchase. Exactly how much? The answer to that question depends on a number of factors.
Net purchase price
Taxes are typically calculated using the net purchase price listed on the bill of sale and title application. The taxable amount includes cash payments and loan payoffs. It does not include incentives offered by dealerships or credit offered for the trade-in of a vehicle.
Let’s say you have your eye on a 2021 or 2022 Jeep Wrangler. The MSRP for the Rubicon trim your rock-crawling heart desires is in the neighborhood of $50,000. The dealership is offering a $2,500 incentive for using in-house financing, and has agreed to give you $10,000 for your trusty Toyota Corolla (which can’t crawl over rocks but did hop a curb in college). The net purchase price, or taxable amount, is $37,500.
MSRP - Dealer Incentives - Trade In = Net Purchase Price
If you were to buy the same Wrangler Rubicon from a private seller and negotiated a purchase price of $45,000, that would be the taxable amount.
Transaction location
All motor vehicle purchases are subject to state, county and local sales taxes. The combined percentage varies based on where the transaction occurs. If you buy from a dealership, taxes are paid to the city/county where the dealership is located. If you buy from a private seller, you pay taxes to the locality where you register the newly purchased vehicle.
Tax rates tend to be slightly higher in urban areas. In Salt Lake County, for example, the combined sales tax rate as of January 1, 2022 is 7.25%. By comparison, Piute County collects a total of 6.1% of the purchase price. Combined rates in some of Utah’s more popular car buying locations are as follows.
- Cache County: 6.7%
- Davis County: 7.15%
- Salt Lake County: 7.25%
- Summit County: 7.15%
- Utah County: 7.15%
- Washington County: 6.45%
- Weber County: 7.25%
Refer to Utah State Tax Commission’s rate chart for a complete breakdown by city and county.
Tax exemptions
Whether an older adult who can no longer drive gifts a vehicle to a younger relative or another scenario plays out with a big red bow, the recipient usually qualifies for a Utah vehicle tax exemption. Simply enter “gift” as the purchase price on the title application. There may be federal tax implications if the gifted vehicle is worth more than $15,000, however. Do your research before accepting that Porsche from Uncle Pennybags.
It is important to note that gifted vehicles are not exempt from Utah vehicle registration fees. Everyone must pay a vehicle title fee of $6. Other fees vary based on the vehicle type, age, gross weight, commercial/private use, etc. Contact the Utah Division of Motor Vehicles to determine the exact amount for the make and model you are budgeting for.
Consider all costs
When comparing vehicles, it’s always a good idea to look at the big picture. Is one party willing to negotiate more than another? Are there any value-added benefits of buying one vehicle over another? Are there any additional costs to consider? If you are taking out an auto loan to purchase a vehicle from a private seller, the rates and terms available at different lending institutions can make a big difference (but Finance With KSL Confidence helps buyers obtain the best financing option). Look beyond the asking price and sales taxes calculations to determine its true value based on your unique situation.
KSL Cars has a large selection of listings from dealerships and private sellers. Use the Price Range and Location search filters to find the right ride now that you have a better idea of what sales tax on a car in Utah is.
