1. What is Texas Auto Loan Tax?

The Texas auto loan tax is a 6.25% sales tax applied to the difference between the vehicle purchase price and any trade-in value. This tax is required when purchasing a vehicle in Texas.

2. How Does the Calculator Work?

The calculator uses the Texas auto loan tax formula:

Where:

• \( price \) — Vehicle purchase price (USD)
• \( trade\_value \) — Trade-in value of current vehicle (USD)
• \( 0.0625 \) — Texas sales tax rate (6.25%)

Explanation: The tax is calculated only on the net amount after subtracting any trade-in value from the purchase price.

3. Importance of Auto Loan Tax Calculation

Details: Accurate tax calculation helps buyers understand the total cost of vehicle ownership and properly budget for their purchase in Texas.

4. Using the Calculator

Tips: Enter the vehicle price and trade-in value in USD. Both values must be valid (price > 0, trade_value ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: Is the trade-in value always deductible?
A: In Texas, yes. The trade-in value reduces the taxable amount of the new vehicle purchase.

Q2: Are there additional local taxes?
A: Some Texas counties and cities may add up to 2% in local taxes beyond the state's 6.25%.

Q3: How is tax calculated with no trade-in?
A: The full 6.25% is applied to the purchase price when there's no trade-in (trade_value = 0).

Q4: Does this apply to used vehicles?
A: Yes, the same tax calculation applies to both new and used vehicle purchases in Texas.

Q5: When is this tax paid?
A: Typically paid at the time of vehicle registration or title transfer.