Last checked Nov 10, 2026
Buying a car in Indiana
The tax you will pay, whether your trade-in lowers it, what the dealer may charge for paperwork, and where to title and register. Taken from official Indiana sources.
- State tax on vehicles
- 7%
- Trade-in lowers tax
- Yes
- Doc fee limit
- $261.72
- Deadline to title or register
- 45 days
details below
Sales tax on a car in Indiana
Indiana charges a state sales tax of 7% on vehicle purchases.
A dealer collects the tax at the sale; on a private purchase the tax is paid at a BMV branch when applying for title. Credit is given for sales tax paid to another state on a vehicle bought there.
Does a trade-in lower the tax?
The trade-in value is deducted only for a like-kind exchange, such as a motor vehicle traded for a motor vehicle, and the trade-in must be owned and titled in the customer's name.
Example, state tax only. On a $30,000 car with a $10,000 trade-in, the taxable amount is $20,000, so the state tax is about $1,400. Without the trade-in it would be $2,100. Local taxes and fees are extra.
Dealer doc fees in Indiana
The Secretary of State's Auto Dealer Services Division, citing IC 9-32-13-7, says it will not take enforcement action over document preparation fees at or below $261.72 as of July 1, 2026. The figure is adjusted for inflation using the Consumer Price Index.
The documentation fee is taxed along with the vehicle.
Whatever the rule, the fee is part of your out-the-door price. Ask for it in the written quote and negotiate the total, not the line. See dealer fees explained.
Title and registration
Titles and registrations are handled by the Indiana Bureau of Motor Vehicles. A certificate of title must be applied for within 45 days after the vehicle is purchased, and an administrative penalty is charged after that.
Also worth knowing
- A dealer that cannot deliver the title at the time of sale must provide an affidavit stating it will deliver the title within 21 days of the sale.
- Document preparation fees must be included in the advertised sale price and shown as a separate line item on the bill of sale.
- A separately stated convenience fee for titling and registration services is not subject to sales tax, unlike the documentation fee.
Sources
- Indiana Department of Revenue: Sales Tax Information Bulletin #28S, Sales of Motor Vehicles and Trailers (May 2026) (in.gov)
- Indiana Secretary of State, Auto Dealer Services Division: Documentation Preparation Fee Adjustment in 2026 (in.gov)
- Indiana Bureau of Motor Vehicles: Buying and Selling a Vehicle (in.gov)
- Indiana Attorney General: Purchasing a Car fact sheet (in.gov)
Last checked Nov 10, 2026; next review by Feb 10, 2027. This page explains how the rules generally work and is not tax or legal advice. Rules change, so confirm with the state. Report an error.
Concierge
Rather not do this part yourself?
Tell us the car you want. A person finds it, checks it, negotiates the out-the-door price in writing, and lines up the paperwork. You approve every step.