How Indiana Sales Tax Works on Out-of-State Car Purchases

Indiana charges 7% use tax on any vehicle you bring in from another state, applied to the purchase price and reduced dollar-for-dollar by whatever sales tax you already paid where you bought it. You pay the balance at the BMV when you apply for an Indiana title, and the title will not be issued until the tax and fees are settled. You have 45 days from the purchase date to get it done.

How the 7% Is Calculated

The rate is a flat 7% of the vehicle’s net purchase price. Indiana calls it use tax rather than sales tax because the purchase happened outside the state, but the rate and math are the same as the in-state sales tax.¹

Two things can change the taxable amount. A trade-in reduces the price subject to tax, but only if you’re trading a like-kind vehicle titled in your name (car for car, not boat for car).² A manufacturer rebate paid to you does not reduce the taxable price; Indiana treats it as a form of payment. If the manufacturer instead gave the dealer a direct price cut, the lower price is what gets taxed.¹

Credit for Tax You Already Paid

Indiana gives a dollar-for-dollar credit for sales tax legally paid in the state where you bought the vehicle. Buy a $25,000 car in a state with a 5% rate, and you already paid $1,250. Indiana’s 7% on that same price is $1,750, so you owe the $500 difference at the BMV.³

If the other state’s rate was 7% or higher, you owe nothing more to Indiana. You will not get a refund for the overage, though. That money stays with the state that collected it.¹

Bought in a State With No Sales Tax

Alaska, Delaware, Montana, New Hampshire, and Oregon charge no state sales tax. Buy a vehicle in any of them and you have no credit to apply, so you owe Indiana the full 7% when you title the car. The same happens when a private seller in another state simply didn’t collect tax on the sale. This is where buyers who thought they saved money by shopping tax-free get caught.

The 45-Day Deadline

You have 45 days from the purchase date to title and register a vehicle in Indiana. If you just moved to the state and already owned the car, the window is 60 days from the date you established residency.⁴

Missing the deadline costs $30 for a late title and $15 for late registration.⁵ There is no grace period. The clock starts the day the seller signs over the title, and driving an unregistered vehicle can also lead to a citation.

Driving the Car Home Before You Title It

Indiana sells a 96-hour temporary delivery permit for this exact situation. It’s valid for 96 hours from issuance and lets you drive the vehicle to your home, a storage location, or a BMV branch.⁶ To get one, bring proof of ownership (the out-of-state title or a bill of sale) and proof of insurance to any Indiana BMV branch. The permit is $18.⁵ Some buyers use the same visit to pick up the permit and start the title application. Dealers in the selling state can also arrange temporary tags, which vary by state.

What to Bring to the BMV

An incomplete application gets returned rather than processed in part, so gather everything before you go.⁷

The original out-of-state title (photocopies aren’t accepted).
A bill of sale showing purchase price, buyer and seller names, vehicle description, and date of sale.
Proof of tax paid in the other state, such as a receipt, sales contract, or dealer invoice. This is how the BMV calculates your credit.
Form ST-108, the Indiana “Certificate of Gross Retail or Use Tax Paid on the Purchase of a Motor Vehicle or Watercraft.” Dealers usually complete it for you; on a private sale you fill it out yourself.²
Proof of Indiana liability insurance.

If you’re claiming an exemption instead of paying tax, use Form ST-108E in place of the standard ST-108.

Fees on Top of the Tax

The 7% is the largest charge but not the only one. A typical passenger vehicle owner also pays:⁵

Title fee: $15.
Registration fee: $21.35 for a passenger vehicle.
Transportation Infrastructure Improvement Fee: $15.
Vehicle excise tax, an annual charge based on the vehicle’s value and age, collected at registration.⁸
Plate transfer fee: $9.50 if you’re moving plates from another vehicle you own.

Fully electric vehicles carry a $242 annual supplemental fee, and hybrids carry an $81 supplemental fee, both collected at registration.⁵ Paying with a credit or debit card adds $0.40 plus 2.06% of the total in processing charges, which is worth doing the math on when the tax bill runs into the thousands. Cash, check, and e-check avoid the surcharge.⁹

When You Owe Nothing

Several situations qualify for exemption, each requiring Form ST-108E rather than the standard ST-108.¹⁰

New Residents

If you owned, titled, and registered the vehicle in your previous state before moving to Indiana, no use tax is due when you transfer the title. “Before” is the operative word: you must have been a genuine resident of the other state at the time of purchase. An Indiana resident who drives to Oregon to buy a car tax-free and then titles it back home does not qualify.¹⁰ The 60-day title-transfer window still applies.⁴

Gifts and Inheritances

A vehicle received as an outright gift or through inheritance is exempt, as long as no money changes hands. If the recipient takes over loan payments, Indiana treats that as a sale unless the recipient was already on the original loan agreement, and a copy of that agreement must go in with the paperwork.¹⁰ Even a token $1 payment between family members turns the transfer into a taxable sale.

Adding or Removing Family Members

Adding or removing a spouse, parent, grandparent, child, or sibling on a vehicle’s title is exempt from use tax. This covers common situations like putting a child on a car they’ve been driving or removing a former spouse after a divorce. Form ST-108E has a section for identifying the family relationship.¹⁰

Paying at the Branch

Everything happens in one visit. The clerk verifies your purchase price and out-of-state tax credit, and you pay the use tax balance along with title and registration fees. Branches accept cash, checks, and cards, though kiosks and online transactions are more limited.⁹ Indiana will not release the title or plates until the full tax and fees are paid.³

1
Indiana Department of Revenue. Sales of Motor Vehicles and Trailers
2
Indiana Department of Revenue. Certificate of Gross Retail or Use Tax Paid on the Purchase of a Motor Vehicle or Watercraft Form ST-108
3
Bureau of Motor Vehicles. Buying and Selling a Vehicle
4
Bureau of Motor Vehicles. Vehicle Registrations
5
IN.gov. BMV Fee Chart
6
Bureau of Motor Vehicles. Temporary Permits
7
IN.gov. Vehicle Title and Registration Application Checklist
8
Bureau of Motor Vehicles. Vehicle Registration Fees and Taxes
9
Bureau of Motor Vehicles. Fees and Taxes
10
Indiana Department of Revenue. Certificate of Gross Retail or Use Tax Exemption for the Purchase of a Motor Vehicle or Watercraft