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There is no question car dealers are experts at “nickel-and-diming” you to death with additional fees and charges when it comes to buying a car. However, depending on the region you live in, there are legitimate state and regional fees required by law. These fees vary from state to state, some can be negotiated and some are your responsibility to pay.
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All dealers have one, the charge is meant to cover the cost of office personnel doing the paperwork after the sale of a new or used car. Most dealerships charge anywhere from $50 to $500 and the fee is normally not brought to your attention until right before you sign the paperwork for your vehicle. Documentation fees (or doc fees) vary from state-to-state and some states have a maximum limit a dealer is allowed to charge. The lowest average is $75 in New York, with the highest average being charged in Florida at $670.
More doc fee tips.
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Sales tax on a vehicle can be very expensive, some states will allow you to finance your tax, title, registration, and others will make you pay it at a later time at the DMV, registry, or tag agency. Many dealers are very “hush-hush” about taxes in states that require you to pay for it out of your pocket during or after the sale.
The dealer knows once you sign the contract the vehicle is yours and they don’t want to risk losing a deal because you’re worried about paying the taxes on the vehicle. For example, sales tax on a $28,000 vehicle at 7 percent would be $1,960. Most counties and cities will add a quarter percent, so the amounts may vary within different areas within your state.
Where are more tips about taxes?
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Some states will give you a nice little tax break when you trade in your old car. They do this by only taxing you on the “trade-difference.” This is the balance after subtracting the amount you received from your trade-in. This is how it works:
$28,000 (New Car Price)
– $10,000 (Trade-in Amount)
= $18,000 (Taxable Trade Difference / Pay Tax on This Amount)
Your trade difference of $18,000 is the amount you will pay taxes on. If you see a “P” in the chart below, this is how your state handles taxes. If your state has a “T” in the tax column, your trade has no bearing on the transaction and you must pay sales tax on the full amount of your new car purchase.
$28,000 (New Car Price / Pay Tax on This Amount)
– $10,000 (Trade-in Amount)
= $18,000 (Trade Difference)
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These types of discounts reduce the purchase price of the vehicle. Most states charge sales tax on the full purchase price of the vehicle BEFORE the rebate is applied to discount the vehicle. For example, a $28,000 car that has a $1,500 cash rebate reduces the vehicle’s sales price to $26,500. However, you’ll still pay sales tax on the original purchase price of $28,000.
There are some states that charge sales tax after the rebate is applied. In the car dealer fee chart above, in the “Are Rebates Taxed?” column, if there is a “Y” in the column, it means sales tax is calculated on the vehicle’s purchase price before the incentive is applied.
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The chart below will not allow you to calculate an exact vehicle cost. It will help you get a good idea of what you will pay. Registry fees are tricky to calculate, you can visit your states’ Department of Motor Vehicles (DMV) web site and use their calculator. Most states also have minor charges (less than $50) for environmental laws. Documentation fees change frequently, I do my best to keep the chart updated. If you know of any updates please let me know and I will make the necessary changes.
I’ve added this handy car dealer fee chart to help you see the estimated average documentation fees (doc fees) charged by dealers in each state. Use caution with states that don’t have a maximum limit, unscrupulous dealers can mark up the doc fee as high as they want to scam an unsuspecting buyer. You can use it to determine if the dealer you’re buying a car from is charging close to the average of what other dealers are charging in the area.
| State | Max sales tax | Ave DMV fees | Trade-In tax? | Rebates taxed? | Doc fee limits | Ave doc fee |
|---|---|---|---|---|---|---|
| Alabama | 11% | $363 | P | Y | No Max | $499 |
| Alaska | 7.50% | $100 | P | N | No Max | $200 |
| Arizona | 11.20% | $532 | P | N | No Max | $429 |
| Arkansas | 11.25% | $34 | P | Y | $129 | $129 |
| California | 10.25% | $296 | T | Y | $80 | $80 |
| Colorado | 11.20% | $598 | P | Y | No Max | $598 |
| Connecticut | 6.35% | $107 | P | Y | No Max | $499 |
| Delaware | 0% | $1,553 | P | N | No Max | $292 |
| District of Columbia | 5.75% | $124 | T | Y | No Max | $300 |
| Florida | 8% | $294 | P | Y | No Max | $799 |
| Georgia | 8.90% | $2,465 | P | Y | No Max | $599 |
| Hawaii | 4.50% | $108 | T | Y | No Max | $245 |
| Idaho | 9% | $62 | P | Y | No Max | $299 |
| Illinois | 11% | $196 | P | Y | $169 | $169 |
| Indiana | 7% | $21 | P | Y | No Max | $198 |
| Iowa | 7% | $365 | P | N | $180 | $180 |
| Kansas | 10.60% | $47 | P | N | No Max | $399 |
| Kentucky | 6% | $21 | T | N | No Max | $450 |
| Louisiana | 11.45% | $138 | P | N | $200 | $200 |
| Maine | 5.50% | $873 | P | Y | No Max | $499 |
| Maryland | 6% | $258 | T | Y | $500 | $300 |
| Massachusetts | 6.25% | $135 | P | N | No Max | $395 |
| Michigan | 6% | $259 | T | Y | $210 or 5% of price, whichever is less | $210 |
| Minnesota | 8.38% | $464 | P | N | $75 | $75 |
| Mississippi | 8% | $39 | P | Y | No Max | $260 |
| Missouri | 10.10% | $45 | P | N | $199.99 | $199 |
| Montana | 0% | $577 | T | N | No Max | $299 |
| Nebraska | 7.50% | $571 | P | N | No Max | $299 |
| Nevada | 8.27% | $550 | P | Y | No Max | $499 |
| New Hampshire | 0% | $60 | P | N | No Max | $372 |
| New Jersey | 6.63% | $133 | P | Y | No Max | $399 |
| New Mexico | 9.06% | $65 | P | Y | No Max | $339 |
| New York | 8.88% | $86 | P | Y | $75 | $75 |
| North Carolina | 3.00% | $88 | P | Y | No Max | $599 |
| North Dakota | 8.50% | $103 | P | Y | No Max | $299 |
| Ohio | 8% | $39 | P | Y | $250 or 10% of price, whichever is less | $250 |
| Oklahoma | 11.50% | $107 | P | N | No limit | $299 |
| Oregon | 0% | $187 | P | N | $115 or $150 if filed electronically | $75 |
| Pennsylvania | 6% (7% Allegheny County - 8% for Philadelphia). | $87 | P | N | $113 or $134 if filed electronically | $134 |
| Rhode Island | 7% | $32 | P | N | $200 | $220 |
| South Carolina | 9% | $39 | P | Y | No Max | $350 |
| South Dakota | 6.50% | $48 | P | Y | No Max | $129 |
| Tennessee | 10% | $35 | P | Y | No Max | $500 |
| Texas | 8.25% | $94 | P | N | No Max | $150 |
| Utah | 8.60% | $154 | P | N | No Max | $299 |
| Vermont | 7% | $70 | P | N | No Max | $180 |
| Virginia | 7% | $53 | T | Y | No Max | $599 |
| Washington | 10.40% | $57 | P | Y | $150 | $150 |
| West Virginia | 7% | $40 | P | Y | $175 | $175 |
| Wisconsin | 5.60% | $145 | P | Y | No Max | $229 |
| Wyoming | 6% | $659 | P | N | No Max | $500 |
State table column definitions.
Car Buying Tip – State fees and how your vehicle purchase is taxed will vary depending on the region and state you live in.
Don’t be caught off guard, always ask beforehand what fees and charges are associated with buying a car in your local area. These charges can be anywhere from a few dollars, to a few thousand dollars.
A good way to find out this information is to ask for an itemized list from the dealership you’re buying the car from. Any legitimate car dealership should be able to email this list to you when requested.
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