Tennessee Car Sales Tax 2025: Complete Guide for Knoxville Buyers

How Much is Sales Tax on Cars in Tennessee?

Tennessee car sales tax consists of three components that can total 9.25% to 9.75% depending on your county:

State Sales Tax: 7%

• Applied to the net purchase price (after trade-ins)
• Collected on all vehicle purchases statewide
• Cannot be avoided regardless of where you buy in Tennessee

Local Sales Tax: 2.25% to 2.75%

• Knox County adds 2.25% local tax
• Applied to first $1,600 of vehicle price only
• Capped at approximately $36-44 maximum

Single-Article Tax: 2.75%

• Additional tax on purchases over $1,600
• Applied to next portion of vehicle price
• Capped at approximately $44 maximum

Total Tax Example for Knoxville Buyers:

For a $20,000 used car:

• State tax (7%): $1,400
• Knox County local tax (2.25% on first $1,600): $36
• Single-article tax (2.75% on next amount): $44
• Total Tennessee sales tax: $1,480

Tennessee Sales Tax on Trade-Ins

Good news for trade-in customers: Tennessee allows you to deduct your trade-in value from the purchase price before calculating sales tax.

Example:

• Vehicle price: $18,000
• Trade-in value: $8,000
• Taxable amount: $10,000 (saves you $560 in taxes!)

At Hilltop Car Sales, we help you maximize your trade-in value to minimize your tax burden.

Additional Fees When Buying in Tennessee

Beyond sales tax, expect these additional costs:

Title and Registration Fees:

• Title fee: $14
• Registration fee: $26.50 (standard passenger vehicle)
• License plate fee: $28.10 (if needed)

Documentation Fees:

• Dealer documentation fee: Up to $398 (state maximum)
• At Hilltop Car Sales, we keep doc fees competitive and transparent

Total Out-the-Door Cost Calculator

For a $15,000 used car in Knoxville:

• Vehicle price: $15,000
• TN sales tax: $1,130
• Title/registration: $68.60
• Doc fees: ~$200
• Total: $16,398.60

Tips to Minimize Your Tennessee Car Sales Tax

1. Maximize Your Trade-In Value

• Get multiple appraisals before trading
• Consider selling privately if the difference is significant
• Clean and maintain your trade-in before appraisal

2. Time Your Purchase Strategically

• Tax rates don't change seasonally
• Focus on negotiating the best vehicle price instead

3. Understand What's Taxable

• Extended warranties purchased separately may have different tax rates
• Gap insurance and some add-ons might be taxed differently

Tennessee Sales Tax vs. Neighboring States

• Georgia: 7.25% - 11.25% (varies by county)
• Kentucky: 6% state + local taxes
• North Carolina: 3% + local taxes
• Virginia: 4.15% + local taxes

Tennessee's tax structure is competitive, especially when you factor in no state income tax.

Frequently Asked Questions

Q: Do I pay sales tax if I buy from a private seller? A: Yes, you'll pay use tax when registering the vehicle - same rate as sales tax.

Q: Can I register my car in another state to avoid Tennessee taxes? A: No, you must pay taxes where you reside. Tennessee will collect use tax if you try to avoid sales tax.

Q: Are there tax exemptions for certain buyers? A: Limited exemptions exist for disabled veterans and some non-profit organizations.

Why Choose Hilltop Car Sales for Your Next Purchase

At Hilltop Car Sales in Knoxville, we help you understand all costs upfront:

• Transparent pricing with taxes and fees clearly explained
• Accurate trade-in appraisals to maximize your tax savings
• No surprise fees - we discuss all costs before you buy
• Expert guidance through Tennessee's tax requirements

Located at 5619 Clinton Highway, Knoxville, TN 37912, we've been helping Knox County residents navigate car purchases since 2009.

Ready to Buy Your Next Used Car in Knoxville?

Now that you understand Tennessee's car sales tax structure, you can budget accurately for your next vehicle purchase. Visit Hilltop Car Sales to browse our hand-selected inventory of quality used cars, trucks, and SUVs.

Call (865) 249-7172 or visit www.hilltopcarsales.com to get started today!