Sales tax

The US purchase tax added at the dealer on top of the advertised price, varying by state and locality: the mirror image of Europe's included VAT.

Sales tax is the American way of taxing a car purchase: a percentage added to the transaction at the point of sale, on top of the advertised price. Its defining feature is variability. State and local governments impose their own general sales taxes, and local rates can differ within a single state, so the rate you pay depends on where you are.

For budgeting, the consequence is that an advertised US price is not the final price: the FTC notes that dealers may leave government-required charges out of it. The same car at the same advertised price can cost two buyers in different places different totals.

Contrast this with VAT territory, where the advertised consumer price is tax-inclusive. CarPairly's US prices are labeled as excluding sales tax for exactly this reason: the site cannot know your county, but it can make sure you are never comparing a taxed price against an untaxed one.

Differs by market

Sales tax applies in the US, with rates set by states and localities. In the EU, UK, Norway, and Australia, the consumption tax is already inside the advertised consumer price (see VAT).

  1. IRS, Use the Sales Tax Deduction Calculator
    Internal Revenue Service Accessed
  2. FTC, Automobile Industry Pricing Transparency: FAQs
    Federal Trade Commission Accessed

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