Arkansas charges 6.5% state sales tax on a car when it is new or a used vehicle priced at $10,000 or more. Used cars under that price are taxed at a reduced rate or not at all. On top of the state rate, your city and county sales taxes apply, but only to the first $2,500 of the purchase price, which keeps the local portion small no matter what you pay. You pay the tax directly to the state when you register the vehicle, not to the dealer at the time of sale.1FindLaw. Arkansas Code 26-52-510 – Payment of Tax on Motor Vehicles by Consumers
The State Rate on a New Car
The statewide rate is 6.5% of the purchase price, and it applies the same way in every county whether you buy from a dealership or a private seller.2Justia. Arkansas Code 26-52-301 – Tax Levied – Definitions3FindLaw. Arkansas Code 26-52-302 – Additional Excise Taxes On a $30,000 new car, the state portion is $1,950. The Department of Finance and Administration will not issue license plates until the tax is paid.
Reduced Rates on Used Cars
Used vehicles are taxed on a tiered scale that depends on the total purchase price:4Justia. Arkansas Code 26-52-324 – Special Tax Rate for Certain Used Motor Vehicles
- Under $4,000: no state sales tax is due.
- $4,000 to $9,999: 3.5% state tax.
- $10,000 or more: the full 6.5% state rate, the same as a new car.
The reduced tier can mean real savings. A used car sold for $8,000 owes $280 in state tax at 3.5% instead of the $520 it would owe at 6.5%.
Local Tax and the $2,500 Cap
Your city and county may add their own sales tax, and local rates vary across Arkansas. For vehicle purchases, though, those local taxes apply only to the first $2,500 of the price, not the full amount.5Legal Information Institute. 006.05.08 Ark. Code R. 91 – Local Gross Receipts Taxes – Section: Maximum Tax Limitation
Take that $30,000 car again, in an area with a combined 2% local rate. You pay 2% on $2,500, which is $50 in local tax, not 2% of the full price. Add the $1,950 state portion and your total sales tax comes to $2,000. You can look up the exact local rate for any Arkansas address through the Department of Finance and Administration’s online tool.6Arkansas Department of Finance and Administration. Streamlined Tax Lookup
What Reduces the Taxable Price
Trade-Ins
A trade-in value is subtracted from the sale price before the tax is calculated. On a $25,000 car with an $8,000 trade-in, you pay sales tax on $17,000. To get this credit, both the buyer and the seller must sign the Department of Finance and Administration’s Bill of Sale form, which you bring to your local revenue office when you register.7Arkansas Department of Finance and Administration. Bill of Sale for Vehicle Claimed as Tax Credit
Private Sale Within 60 Days
If you sell your old vehicle privately instead of trading it in, you can still claim a credit against the tax on your next car. The replacement vehicle must be of greater value and purchased within 60 days of the sale. The credit equals the sale price of the old vehicle, and you need a completed Bill of Sale signed by both parties.7Arkansas Department of Finance and Administration. Bill of Sale for Vehicle Claimed as Tax Credit
Discounts Versus Rebates
Dealer discounts negotiated off the price reduce the taxable amount. Manufacturer rebates are generally treated as a form of payment rather than a price cut, so you still owe tax on the pre-rebate amount.
Extended Warranties
If you buy an extended warranty or service contract with the vehicle, the cost of that contract is also subject to sales tax, paid at registration alongside the tax on the car itself.8Code of Arkansas Rules. 26 CAR 30-502 – Services Subject to Tax – Taxable Services
Cars Bought Out of State
If you buy a car in another state and register it in Arkansas, you owe the full Arkansas sales tax, and Arkansas gives no credit for sales or use tax you already paid elsewhere.9Justia. Arkansas Code 26-53-131 – Credit for Tax Paid in Another State This is different from how Arkansas handles most other purchases, so budget for the possibility of paying twice. Some out-of-state dealers will agree not to collect their state’s tax if you show proof of Arkansas residency, but that depends on the other state’s rules.
Gifts
A vehicle received as a genuine gift is exempt from sales tax, as long as the donor originally paid sales or use tax on the vehicle and registered it in their own name, and both parties sign an affidavit confirming the transfer is a gift. The exemption is not limited to family members. If any money changes hands, or if the donor never paid tax on the vehicle, the exemption does not apply and the recipient owes tax on the value.10Legal Information Institute. 006.05.08 Ark. Code R. 12 – Sale of Motor Vehicles
When and How to Pay
You have 60 days from the date of purchase to register the vehicle and pay the sales tax.11FindLaw. Arkansas Code 27-14-903 – Vehicle Registration Deadline Miss that deadline and a penalty of 10% of the tax owed is added. You will have to pay the tax and the penalty before the state will register the car.1FindLaw. Arkansas Code 26-52-510 – Payment of Tax on Motor Vehicles by Consumers
You can pay in person at a local revenue office or online through the Department of Finance and Administration’s MyDMV portal, which lets you register the vehicle, apply for a title, transfer a plate, and pay the tax in one session.12Arkansas Department of Finance and Administration. MyDMV Credit cards, debit cards, and electronic checks are accepted.
What to Bring
- Bill of Sale showing the purchase price, sale date, and vehicle description. If you are claiming a trade-in or private-sale credit, use the DFA Bill of Sale form signed by both parties.
- The vehicle title, signed over from the seller.
- Odometer disclosure, required for vehicles less than 20 years old.
- Proof of liability insurance.
If any trade-in or private-sale documentation is missing, tax is assessed on the full purchase price with no deduction.7Arkansas Department of Finance and Administration. Bill of Sale for Vehicle Claimed as Tax Credit