Tennessee’s statewide sales tax is 7% and one of the highest in the country. That rate applies to all vehicle sales, new or used—and depending on where you are, local and county taxes can push your tax total to well over 9%.

The city of

Memphis

sees the highest car sales taxes in the state with rates of 9.75%. While the average car sales tax in Tennessee is 9.614%, you can find lower tax rates outside of the big metro centers. In Mountain City, for example, the tax rate sits at just 8.5%.

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How are car trade-ins taxed in Tennessee?

Car dealerships in Tennessee will often accept trade-ins as credit toward your car purchase.

Trading in your old vehicle

can save you money, as the trade-in value is not taxable in Tennessee.

Let’s imagine you are buying a

Jeep Grand Cherokee

worth $24,400 in

Nashville

. Your purchase would be subject to state and local taxes totaling 9.25%, which amounts to an extra $2,257.

But, if you trade in your

Nissan Rogue

for a $3,000 credit, you’ll only pay tax on $21,400, which amounts to an extra $1,979. You would save yourself $278 in taxes.

While trade-in value is tax-exempt in Tennessee, other dealer incentives and rebates are not. When a dealer offers a rebate on your purchase, you must still pay the tax on the price of the vehicle before the rebate is applied.

So, if your dealer offers a rebate of $2500 on that same Jeep Grand Cherokee, you will still pay the tax on the full sticker value of $24,400.

How to calculate sales tax on a car in Tennessee

There are

online resources

that can help you calculate the sales tax on your car purchase so there are no surprises when you’re ready to buy. To figure out the tax you’ll pay, you just need to know:

The sticker price of the vehicle you want

The Tennessee zip code where you're purchasing your new car

Exemptions from Tennessee car sales tax

Car buyers in Tennessee can expect to pay an average of 9.614% in car sales tax. Some purchases may be exempt from sales tax, however. Exemptions include vehicles sold to:

Members of the armed forces

Qualified non-profit organizations

Government entities

You can apply for an exemption by filling out the appropriate forms available on the

Tennessee Department of Revenue website

How to estimate Tennessee tax, title, and registration fees

While sales tax is the biggest additional fee you’ll notice on your car purchase, it’s certainly not the only one. Some other additional fees associated with purchasing a car include the

certificate of title

, transfer fees, registration fees, and plate transfer fees. Here’s how much you can expect these fees to cost in Tennessee:

Cost	Average cost
Sales tax	9.614%
Registration fee	$21.50
Title fee	$11
Plate transfer	$1
Documentation fee	$495

Another extra hidden cost is the documentation fee, or doc fee. This is a fee that dealerships charge to cover the cost of preparing and filing a sale. The average doc fee in Tennessee is $495, but these fees are not regulated and can vary from dealer to dealer.

MORE:

What fees you should (and shouldn’t) pay when buying a car

How to find affordable car insurance in Tennessee

Once you’ve paid all the necessary taxes and fees on your vehicle purchase, you’ll need to make sure you’ve got proper

car insurance

Tennessee requires all drivers to carry car insurance

with a minimum of $25,000

bodily injury liability

per person, $50,000 bodily injury liability per accident, and $15,000

property damage liability

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