Used Car Sales Tax Laws in Pennsylvania

used car sales tax laws in pennsylvania

Buying or selling a car is no small feat. You’ll have to complete some paperwork and pay a few fees in order to finalize the transaction, and both parties need to be aware of this

Moreover, sales tax in Pennsylvania will raise the total cost of the vehicle in question — and it’s not something you can avoid. Therefore, understanding how used car sales tax laws in Pennsylvania work is essential to buying or selling a vehicle in the state.

Keep reading to learn more.

Pennsylvania Car Sales Tax 101

Believe it or not, vehicle purchases actually account for a large percentage of sales collected in Pennsylvania — hence the reason for a larger-than-expected tax bill. 

Here’s an overview of what car sales tax look like in the state:

  • There is a 6% state sales tax rate on all vehicle purchases in Pennsylvania.
  • Allegheny County and the City of Philadelphia are the exceptions. Sales tax for Allegheny County has a 7% rate and the City of Philadelphia has an 8% rate.
  • Dealerships selling both new and used vehicles may also charge hundreds of dollars for document preparation. Some states have caps on these fees and others do not.
  • For rebates on trade-ins, the state government only applies the above sales tax to the final cost minus the rebate amount. So if you’re purchasing a used vehicle from a dealer for $20,000 with a $1,000 trade-in, you’ll only pay sales tax on the $19,000.
  • In addition to taxes, vehicle purchases in the state are subject to other fees. This would include registration, title, and plate fees.
sales tax clock with coins

Regulations for Selling Cars in Pennsylvania

regulation paperwork for selling cars

Regarding the used car sales tax laws in Pennsylvania, the rules and regulations simply follow all other car-selling legalities within the state. The only caveat for vehicle sales is potentially being subject to the Motor Vehicle Understated Value Program (MVUVP).

Essentially, the MVUVP is a program created by the Pennsylvania state government that allows the Department of Revenue to add more sales tax to certain vehicle purchases. It’s designed to target individuals who attempt to sell cars significantly below market value in an effort to reduce the amount of sales tax due.

Therefore, if the sales price is too far below the vehicle’s current market value, the Pennsylvania MVUVP can raise the taxable amount to account for the vehicle’s fair market value. 

It should also be noted that the fair market value of a vehicle is specifically determined by the Pennsylvania government — not the buyer or seller. You can learn more about this on the Department of Revenue website, but it’s important to be aware that the Department of Revenue’s tax estimates may be higher than book values. 

In this instance, you would have to create a list of things that are wrong with the vehicle or reasons for it being sold at a lesser value. This list will become justifiable proof for the PennDOT notary before signing over the title and completing the legal sale.

We Make Car Buying and Selling Much Easier

Paperwork for car buying and selling can be a tedious process, especially in Pennsylvania. When you choose to buy or sell with Motobyo, we can help simplify the entire process, including the used car sales tax, registration and paperwork process. 

Visit us today and learn more about how we work and what we do to make car buying and selling quick, fair, and painless.