What is the car sales tax rate in Vermont?

Vermont charges a 6% Purchase and Use Tax on motor vehicles. This is a distinct tax administered by the Vermont DMV at registration, separate from the state's general 6% sales tax. It applies to the taxable purchase price of the vehicle when you buy and register it in Vermont.

Does a trade-in reduce car tax in Vermont?

Yes. When you trade a vehicle in to a dealer, Vermont subtracts the trade-in allowance from the purchase price before applying the 6% tax. For example, a $28,000 car with a $6,000 trade-in is taxed on $22,000 — saving $360 in tax compared with no trade-in.

Are manufacturer rebates taxed in Vermont?

Yes. Manufacturer rebates lower the cash you pay but do not reduce the taxable base in Vermont — the 6% tax is still calculated on the price before the rebate. The calculator reflects this by subtracting the rebate only from your out-the-door cash total, not from the taxable amount.

Is the tax based on the price I paid or the book value?

Vermont bases the Purchase and Use Tax on the greater of the actual purchase price or the clean trade-in book value of the vehicle. This rule discourages under-reporting a sale price. If your negotiated price is well below book value, the DMV may tax you on the book value instead.

Does the 6% apply to leased vehicles too?

Short-term vehicle leases and rentals in Vermont are subject to a separate 9% tax rather than the 6% purchase-and-use rate, so this calculator covers purchases rather than short-term leases. Long-term lease arrangements have their own treatment; confirm the applicable rate with the Vermont DMV.

Vermont Car Sales Tax Calculator

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Buying a car in Vermont means paying a 6% Purchase and Use Tax at the DMV — a tax that trips up out-of-state buyers because it is administered separately from the general sales tax and follows its own trade-in rules. This calculator applies the 6% rate correctly: it subtracts a trade-in from the taxable base while keeping rebates taxable, then shows your estimated out-the-door total.

How it works

Vermont’s rule has three moving parts:

Taxable base = purchase price − trade-in. A vehicle traded in to a dealer reduces the amount subject to tax.
Rebates stay taxable. A manufacturer rebate lowers the cash you hand over but does not reduce the base the 6% is calculated on.
6% Purchase and Use Tax is then applied to that base.

The tool also adds a dealer documentation fee (non-taxable) to estimate the full out-the-door figure: (price − trade − rebate) + tax + doc fee.

Example and notes

A $28,000 vehicle with a $6,000 trade-in is taxed on $22,000, producing $1,320 in Vermont Purchase and Use Tax. A $1,500 manufacturer rebate cuts your cash price but not the tax — the 6% still applies to the $22,000 base.

One important catch: Vermont bases the tax on the greater of your purchase price or the clean trade-in book value. If you report an unusually low price, the DMV may tax the book value instead. This is an estimate for budgeting — confirm current rules at tax.vermont.gov and dmv.vermont.gov before registering.