How much is sales tax on a $20,000 car in Texas?

Buying a car in Texas involves more than just the sticker price. One of the key costs to consider is the sales tax, which Texas applies at a rate of 6.25% on vehicle purchases. This means that if you're buying a car priced at $20,000, the sales tax alone will amount to $1,250.

How Texas Vehicle Sales Tax is Calculated

The state of Texas imposes a flat 6.25% sales tax on the purchase price of a vehicle. Unlike local sales tax rates on retail items, vehicle sales tax does not vary by city or county—the rate is the same statewide.

To calculate the sales tax for any vehicle purchase, use the formula:

Sales Tax = Vehicle Price × 6.25%

For a $20,000 car: $20,000 × 0.0625 = $1,250

This tax is due at the time of title and registration and must be paid to the Texas Department of Motor Vehicles (TxDMV) or a county tax office.

Additional Costs to Consider

Beyond the 6.25% state sales tax, vehicle buyers in Texas should also budget for other potential fees, such as:

  • Title Fee – Usually around $33

  • Registration Fee – Varies but typically around $50-$80

  • Dealer Documentation Fees – These can range from $50 to $150

  • Local County Fees – Some counties charge extra fees for road and bridge maintenance

Are There Exemptions or Discounts?

In certain cases, car buyers may be eligible for exemptions or reduced taxes:

  • Trade-In Credits: Texas does not allow a sales tax deduction for trade-ins, meaning you pay tax on the full purchase price, not the difference after a trade-in.

  • Private Party Purchases: If buying from an individual rather than a dealership, the state still requires the 6.25% tax, but it is calculated based on the car’s Standard Presumptive Value (SPV), which may differ from the selling price.

  • Military & Government Vehicles: Some vehicles purchased for government or nonprofit use may qualify for tax exemptions.

Final Thoughts

When purchasing a $20,000 car in Texas, expect to pay $1,250 in sales tax, along with additional registration and title fees. Since trade-ins don’t reduce taxable value, it's essential to budget accordingly to avoid surprises at the dealership or county tax office.

George Dimov