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
Calculator
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.
References
- Arkansas Department of Finance and Administration: Vehicle Tag Renewal
Writer Bio
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.
The Arkansas (AR) state sales tax rate is currently 6.5%. Depending on local municipalities, the total tax rate can be as high as 11.50%.
Sales tax is a tax paid to a governing body (state or local) for the sale of certain goods and services. First enacted in the United States in 1921, sales tax dates back to ancient Egyptian times where paintings depict the collection of tax on commodities. Arkansas first adopted a general state sales tax in 1935. Since that time, the rate has risen to 6.5%.
As a business owner selling taxable goods or services, you act as an agent of the state of Arkansas by collecting sales tax from purchasers and passing it along to the Department of Finance. This is an important point worth emphasizing. Any sales tax collected from residents belongs to the Department of Finance. As a business owner, it is your responsibility to manange the sales tax you collect to remain in compliance with state laws and avoid penalties and interest.
Arkansas collects a 6.5% state sales tax rate on the purchase of all vehicles which cost more than 4,000 dollars. Vehicles which were purchased at a cost of 4,000 dollars or less are not applicable for state sales tax, and will not be charged.
How much are taxes and fees on a car in Arkansas?
How much is the car sales tax rate in Arkansas? Arkansas ranks tenth among states with the highest car sales tax at 6.5%. This rate applies to all car purchases—whether you buy new or used. You'll also need to account for county and local sales tax, which will be added to the base 6.5%.How do I avoid car sales tax in Arkansas?
You can avoid paying sales tax on car transactions if you buy a used car in Arkansas for less than $4,000.How do I figure sales tax in Arkansas?
How 2022 Sales taxes are calculated in Arkansas. The state general sales tax rate of Arkansas is 6.5%. Cities and/or municipalities of Arkansas are allowed to collect their own rate that can get up to 3.5% in city sales tax.Arkansas bill proposed to change used car sales tax threshold
How much is sales tax on a $25,000 car in Arkansas?
Do I have to pay sales tax on a used car in Arkansas? Vehicles priced under $4,000 are exempt from sales tax. Vehicles priced from $4,000 to $10,000 are taxed at 3.5%. Vehicles priced over $10,000 are taxed at 6.5%.What is the formula to find the sales tax?
When written out, the equation looks like this: Sales tax rate = Sales tax percent / 100. Sales tax = List price x Sales tax rate.Can a bill of sale be handwritten in Arkansas?
Arkansas Vehicle Bill of Sale. The state of Arkansas provides a document for vehicles, but you can also draft your own bill of sale for a car. Bills of sale do not require notarization.Do I have to pay property tax on my car every year in Arkansas?
Before renewing your license you are required by Arkansas law to assess your vehicle with your county assessor. Assessments are due by May 31 each year. You must pay all personal property taxes you owe in your county of residence.How long do you have to pay sales tax on vehicle in Ar?
If use tax is owed on the purchase of a motor vehicle, vessel, or aircraft, it is due within 30 days of the purchase.How do I calculate my ad valorem tax in Arkansas?
Your ad valorem (Latin for “according to value”) general taxes are billed one year behind and are calculated by multiplying the “taxable value” (20% of the appraisal value established by the Assessor) times the millage rate (a mill is 1/10th of a penny). Click to view the 2021-2022 Millage Rate Chart.How much tax do I pay on car?
The two taxes charged to the end consumer on cars and bikes previously were excise and VAT, with an average combined rate of 26.50% to 44% which is higher than the GST rates of 18% and 28%.How much is sales tax on a used car in Arkansas?
The state sales tax rate paid by purchasers of used vehicles, trailers and semi-trailers priced between $4,000 and $10,000 dropped to 3.5% Saturday, thanks to a state law passed in 2021. The previous rate was 6.5%. Vehicles priced below $4,000 already are exempt from the sales tax.What is Arkansas sales tax in 2022?
It is collected by out-of-state vendors from Arkansas customers and is remitted by them to the State or is reported directly by an in-state purchaser if the tax is not collected by an out-of-state seller. Current Tax Rate is 6.5% (non-food items).How much does vehicle registration cost in Arkansas?
The fees that AR residents pay depend on the above factors, but there are also base fees for registering a car in AR, which include: 3000 lbs and under: $17. 3001 to 4500 lbs: $25. 4501 lbs and over: $30.Do seniors pay property tax in Arkansas?
Age 65 or Disabled Homeowner Property Tax ReliefHomeowners who qualify for the homestead tax credit and who are either age 65 or older or disabled may be eligible for additional property tax relief.
How many years can you go without paying property taxes in Arkansas?
By law, if real estate taxes are not paid for two years, it will be certified to the Arkansas Commissioner of State Lands to be sold for taxes.What age do you stop paying vehicle tax?
Historic car tax - when you can stop paying car taxOnce a vehicle reaches 40 years old it is classed as “historic” and, although it still has to be taxed every year, there is no charge. From January the exemption will apply to cars made before 1980 or registered before 8 January 1980.