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How are vehicle sales taxed in Tennessee?

Tennessee Sales Revenue enhancement on Car Purchases:

Vehicles purchases are some of the largest sales ordinarily made in Tennessee, which means that they tin can lead to a hefty sales tax neb. This page covers the well-nigh important aspects of Tennessee'southward sales tax with respects to vehicle purchases. For vehicles that are being rented or leased, come across see taxation of leases and rentals.

Tennessee collects a seven% state sales revenue enhancement rate. There is a maximum revenue enhancement charge of 36 dollars for county taxes and 44 dollars for state taxes.

In addition to taxes, car purchases in Tennessee may be subject field to other fees like registration, championship, and plate fees. Yous can observe these fees further down on the page.

Do Tennessee vehicle taxes apply to trade-ins and rebates?

How are trade-ins taxed?

Many dealerships permit you to trade-in your one-time car in exchange for a credit applied to the price of a new vehicle. For example, y'all could merchandise-in your old automobile and receive a $5,000 credit confronting the toll of a $10,000 new vehicle, making your out-of-pocket cost merely $5,000.

In Tennessee, the taxable price of your new vehicle will be considered to be $5,000, equally the value of your trade-in is non subject to sales tax. This means that you lot save the sales taxes yous would otherwise have paid on the $v,000 value of your merchandise-in.

How are rebates and dealer incentives taxed?

Many dealers offering cash incentives or manufacturer rebates on the sticker price of a vehicle in club to encourage sales. For example, a $i,000 cash rebate may be offered on a $10,000 car, meaning that the out of pocket cost to the heir-apparent is $9,000.

Tennessee taxes vehicle purchases before rebates or incentives are applied to the price, which means that the buyer in this scenario volition pay taxes on the vehicle as if information technology cost the full $10,000.

Other taxes and fees applicable to Tennessee car purchases

In improver to state and local sales taxes, at that place are a number of boosted taxes and fees Tennessee car buyers may encounter. These fees are separate from the sales tax, and volition likely be collected by the Tennessee Department of Motor Vehicles and not the Tennessee Department of Revenue.

Title Fee: $5.50

Registration Fee: $21.fifty

Plate Transfer Fee: $1

Average DMV fees in Tennessee on a new-car buy add together upwards to $24 ¹, which includes the title, registration, and plate fees shown above.

Tennessee Documentation Fees

Dealerships may also charge a documentation fee or "doc fee", which covers the costs incurred by the dealership preparing and filing the sales contract, sales revenue enhancement documents, etc. These fees are dissever from the taxes and DMV fees listed above.

The average doc fee in Tennessee is $495 ⁱ, and Tennessee police force does non limit the amount of doctor fees a dealer can accuse. Because these fees are set by the dealerships and not the government, they tin can vary dealership to dealership or even vehicle to vehicle.

1 - Average DMV and Documentation Fees for Tennessee calculated by Edmunds.com

Dorsum to Tennessee Sales Tax Handbook Pinnacle