Wherever you buy a new car, it will cost you in taxes and fees. So as with ownership of a new car in California, you will be charged for its sales tax and license. However, there is a flat tax rate of which you should be aware when buying a new car in California.
Read also: What is a Car Tag Number
Buying a new car in California may cost more than you expect because sales tax is charged on a percentage of the purchase price. Plus, if combined with other fees, such as a vehicle license fee and documentation.
If you want to buy a new car in California but aren’t sure how much the sales tax and vehicle license fee are, check out our post because we’ll show you the information you need below. Let’s check it out!
How Much Is California Sales Tax on a New Car?
Through the California Department of Tax and Fee Administration, sales tax on all cars, new or used, in California will be charged 7.25%. However, the sales tax is divided into two funds:
- The 6% goes into the initial sales tax in California.
- The 1.25% goes into city and county funds where you buy the car.
According to reports, only a quarter of California’s cities will charge a 7.25% car sales tax. For example, Alameda County charges the highest car sales tax in California, ranging from 10.25% to 10.75%.
Aside from that, other local taxes will stretch the sales tax on your car by 0.10%–1%. Since more than one district tax is effective in some areas, you can expect the total tax rate to surpass 10%.
In fact, California is one of the states in the United States with the highest sales tax rates. The residents of California have one of the highest state income tax rates of any other state in the country, at 13.3%.
In California, the collected tax of 7.25% goes to the respective counties and funds city and county operations and transportation. The additional sales taxes that are charged by the city or county are used to fund public transportation programs and other county-wide initiatives.
How Much Does a New Car’s License Fee Cost in California?
If you buy a new car in California, you will need to pay a vehicle license fee—that fee is not included in your property tax. The car license fees are based on the purchase price or value of your car.
The vehicle license fee in California is around 1.15% of the value of your car. You may be charged 0.65% of the value of your vehicle to renew your driver’s license. However, vehicle license fees will decrease for your car’s first 11 renewal years or until your car is transferred.
The vehicle license fees will be charged when you register your vehicle at the Department of Motor Vehicles. Beforehand, you may need to pay a $34 registration fee along with a $35 California Highway Patrol fee. Then, the vehicle license fee of 1.15% of the value of your vehicle will be charged.
After these major items are kept away, a smaller fee may or may not be added to the registration fee, depending on the type of vehicle you are registering. The fees include a fingerprint ID fee of $1.00, a Crime Deterrence Program Fee of $1.00, a Smog Abatement Fee and a Smog High Polluter Repair Fee of $6.00 apiece, an Air Quality Management District Fee of $6.00, and a Reflectorized License Plate Fee of $1.00. It’s important to note that the insignificant fees could add up quickly.
For more information, there are some groups that do not have to pay a vehicle license fee in California. Here they are:
- Disabled veteran with a service-related disability rating of 100%
- Non-resident military personnel stationed in California
- California Indian tribe and its members
- Federally recognized Indian tribe
- Specialized transport vehicles
- Historic vehicles and/or horseless carriages
A bookworm and researcher especially related to law and citizenship education. I spend time every day in front of the internet and the campus library.
