Excise Tax and Sales Tax
Massachusetts enforces an excise tax each year for vehicles registered in the state. The excise tax is $25 for every $1,000 of the vehicle’s value. The car’s value is based on the manufacturer’s listing price for the year it was manufactured.
The sales tax on a $20,000 car in Massachusetts is approximately $1,250. When moving to Massachusetts, sales tax may apply based on the car’s fair market value. Transferring plates costs around $25.
To calculate sales tax, multiply the purchase price by 6.25%. For a $20,000 car, the tax would equal $1,250. Additional fees also apply for registration, dealership charges, etc.
On a $30,000 car with a $10,000 trade-in and $2,000 rebate, the taxable amount is $18,000. At 6.25%, the sales tax would be $1,125.
The standard Massachusetts sales tax rate is 6.25% for all car purchases. Sales tax is collected by the seller and paid to the state where the buyer registers the car.
Documentation fees in Massachusetts average $340 per sale to cover contract preparation and tax documentation. Fees vary by dealership.
Tax Credits and Registration Fees
Massachusetts has a trade-in tax credit. With a $10,000 trade-in towards a $20,000 new car, the taxable amount is the $10,000 difference.
Registration renewal fees in Massachusetts are $60 for passenger vehicles and light trucks for 2 years. Initial registration is $60. Adding or removing a lien holder is $25. Transferring a certificate of title is $75. Registration gift tax transfer is $25.
The sales tax must be paid before the car can be registered.