How to Figure Arkansas Sales Tax on Used Carsby Samantha Kemp
When you purchase a used vehicle in Arkansas, you are responsible for paying the sales tax on the vehicle, provided that the purchase is not exempt. This tax is in addition to the federal excise tax, which may have been rolled into the vehicle loan. You must register the vehicle within 30 days of the purchase and pay for state sales tax at the time of registration.
Items you will need
Bill of sale
Determine Taxable Amount
Locate the purchase price information on your bill of sale. Arkansas bases its sales and use tax on the total delivery price, which includes any rebate, extra equipment, extended warranties and freight charges. These are more typical if you buy the car from the dealership as opposed to a private party.
The federal excise tax is not included in the taxable amount. The tax applies to motor vehicles, trailers and semi-trailers. Vehicles that were purchased for less than $4,000 are exempt.
Subtract Trade-in Value
Locate the trade-in credit on your bill of sale, if applicable. Subtract the credit you received for the trade-in from the total delivery price.
Subtract Value of Old Vehicle
Subtract the amount that you sold your vehicle for if you disposed of it outside of a trade-in. Arkansas law gives you credit for such a sale as long as it was within 45 days before or after the purchase of the recently acquired vehicle. Bring the bill of sale for the old vehicle with you when paying tax so you receive this credit.
Subtract Balloon Note
Subtract the amount of a final balloon note payment if you turned in a vehicle rather than paying this final note. Arkansas' Department of Finance and Administration may provide you with a credit for the amount of the final balloon payment. Provide the representative at the Department of Motor Vehicles any paperwork from the dealership that reflects this balloon amount.
Multiply by Tax Rate
Multiply the final price by the applicable tax rate. The state sales and use tax rate is 6.5 percent. Texarkana residents must pay 7 percent.
Pay Local Taxes
Use the local tax lookup tool on the Department of Finance and Administration website to determine if you will also have to pay local tax in addition to state tax. Taxes are based on your residence. You can also use this table to see the tax rate for your county. Local taxes do not exceed $25 for each 1 percent of tax that is due.
Samantha Kemp is a lawyer for a general practice firm. She has been writing professionally since 2009. Her articles focus on legal issues, personal finance, business and education. Kemp acquired her JD from the University of Arkansas School of Law. She also has degrees in economics and business and teaching.