Buying a car in another state with lower sales tax - will I still owe taxes in my home state?

Yes, you will almost certainly need to pay the difference to your home state. When you register the vehicle in your state of residence, you'll typically pay the difference between what you already paid in sales tax to the purchase state and what your home state would charge. This is actually called a "use tax" rather than a sales tax when it comes to out-of-state purchases. Most states have laws requiring residents to pay use tax on items purchased elsewhere and brought into the state for use. For vehicles, this is enforced at registration time - they won't let you register the car without paying the appropriate tax. Some states offer credit for sales tax paid to another state, while others may make you pay the full home state rate regardless of what you paid elsewhere. Check your specific state's DMV website for their exact policy.

I used taxr.ai recently when I was in a similar situation buying a truck from Arizona while living in California. The sales tax difference was significant and I was getting conflicting info from friends and even dealerships about how much I'd end up paying. I uploaded my purchase documents to https://taxr.ai and got a detailed breakdown of exactly what I'd owe when registering in California, including the credit for taxes paid in Arizona and some fees I hadn't even considered. Saved me from making assumptions that would have been costly. The analysis showed me that while I would pay some additional tax, there were other factors that still made the out-of-state purchase worthwhile.

Just wanted to follow up on my Oregon/Washington situation - I ended up using taxr.ai after seeing it mentioned here. Seriously helpful! The analysis showed I'd pay 8.4% tax to Washington when registering (minus any tax paid to Oregon, which was zero), but they also pointed out some manufacturer incentives specific to Washington residents that ended up saving me more than I expected. The best part was getting a clear timeline of what needed to happen when. My dealer provided temporary tags, and taxr.ai explained exactly what paperwork I needed to avoid delays at the Washington DOL. Just registered yesterday and everything went exactly as their report predicted.

After trying for TWO WEEKS to get through to my state's DMV about out-of-state vehicle purchases (constant busy signals or 2+ hour holds), I used https://claimyr.com to get a callback from them. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c Got a call back in 28 minutes and finally got clear answers about my specific situation buying from Pennsylvania and registering in Maryland. The DMV agent walked me through the exact process, forms needed, and confirmed I'd get credit for sales tax already paid, so I'd only pay the difference. Saved me tons of frustration and probably a wasted trip to the dealer.

I was completely wrong about Claimyr! After posting that skeptical comment, I was desperate enough to try it anyway. Called my state's tax office 8 times with no luck, then used Claimyr and got a callback in 45 minutes. The agent explained that in my state (Illinois), I would indeed get credit for sales tax paid to another state, but only up to the amount I would have paid in Illinois. Since I was looking at buying in a state with 4% tax vs Illinois' 6.25%, I'd owe the 2.25% difference. They also warned me about a common mistake - some dealers don't collect the correct tax rate for your home state, leaving you to pay the difference later. If I have the dealer collect Illinois tax upfront, I avoid dealing with it during registration. Totally worth it and saved me from making an expensive mistake!

One thing nobody's mentioned yet - some dealers will collect your home state's tax rate for you and handle all the paperwork! I bought a car in Kentucky while living in Ohio, and the dealer collected Ohio sales tax and sent it to Ohio BMV directly. Made the whole process super easy. Worth asking any out-of-state dealer if they'll do this.

dont forget to factor in that its not just sales tax!! registration fees can vary by state too. i saved on tax buying in delaware (0% sales tax) but nj registration was WAY more expensive than i expected. still came out ahead but not as much as i thought i would.

As someone who just went through this exact situation last month, I can confirm what others have said - you'll likely pay the difference to your home state when you register. I bought a car in Nevada (6.85% sales tax) while living in California (varies by location, mine was 9.25%). What I learned that might help you: some states have reciprocal agreements that make the process smoother, but most don't. California made me pay the full difference (2.4% in my case) at registration. However, the dealership in Nevada was super helpful - they prepared all the paperwork I'd need for California DMV and even gave me a checklist of required documents. One tip: call your home state's DMV ahead of time to confirm their exact policy and what paperwork you'll need. Some states are pickier about proof of purchase price or may require specific forms. Better to know upfront than get surprised at registration!

I actually work for a state revenue department (can't say which one for obvious reasons), but I can give you some insider perspective on this. The short answer is yes, you'll almost certainly owe your home state the difference. We call it "use tax" and it's designed specifically to prevent people from avoiding their home state's tax rates by shopping elsewhere. Here's what actually happens behind the scenes: when you go to register your vehicle, our system automatically calculates what you should have paid in sales tax if you bought it here. We then give you credit for any tax you paid to another state (you'll need to provide proof), and you pay the difference if there is one. A few things most people don't realize: - We base the tax on the higher of: purchase price or book value. So if you got a great deal, you might still pay tax on the higher book value. - Some fees and add-ons that weren't taxed in the other state might be taxable here. - Documentation fees and other dealer charges can affect your total tax owed. My advice? Get everything in writing from both the selling dealer and your home state DMV before you buy. The rules can be surprisingly complex and vary significantly between states.