How Texas Calculates Car Sales Tax in 2026
Texas charges a single 6.25% state motor vehicle sales and use tax (Form 14-317) administered by the Comptroller, with no county or city-level local motor vehicle tax add-ons. However, Texas counties typically impose separate ad-valorem property taxes annually on the vehicle's depreciating value, collected with registration renewal. The 8.2% combined figure reflects state tax + average county annualized ad-valorem rollup. Source: https://comptroller.texas.gov/taxes/motor-vehicle/.
In every TX county and city, the dealer collects the tax at time of sale via the retail installment contract or bill of sale, then remits to the Texas Department of Revenue on the buyer's behalf โ typically within 15-30 days. If buying from a private party, the buyer remits the tax in-person at the DMV/County Assessor office at time of title/registration.
Trade-In Credit Rule in Texas (2026 Statute)
Texas allows a FULL trade-in credit against the 6.25% motor vehicle sales/use tax. Purchaser's $15,000 trade against a $40,000 new vehicle yields tax of only $25,000 ร 6.25% = $1,563 instead of $2,500 โ a $937 savings. The trade must occur at the SAME dealership transaction on Form 14-317.