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The Politics of Car Shopping in Ohio


 Heading to Ohio to shop for a car? Have you thought about sales tax?

Before the Internet, anyone interested in buying a car perused local auto dealerships or scanned newspapers for good deals. While that still occurs, there's a new way to hunt for good deals: online. The perfect car may not be at the lot down the street or even in the next town--it may be at a dealership in another state. Savings can be considerable; it really can be worth a drive, or even a flight, to purchase a new car.

Ohio Department of Taxation is any indication, savvy shoppers do come to Ohio specifically to buy a car and take it home.

The release, Sales and Use Tax: Sales of Motor Vehicles to Nonresidents of Ohio, is a revision of a previous information on the same subject. It explains that Ohio state law exempts sales to most nonresidents who remove the newly purchased vehicle from Ohio to be titled, registered or used outside Ohio.

Seven non-exempt states

However, motor vehicle dealers are required to collect sales tax from nonresidents intending to register the vehicle in one of the following seven states:

  • Arizona,
  • California,
  • Florida,
  • Indiana,
  • Massachusetts,
  • Michigan and
  • South Carolina.

Nonresidents from these states must pay the lesser of two amounts:

  • The sales tax due in Ohio; or
  • The amount of sales tax the Nonresident would be required to pay in the state of titling, registration or use.

Trade-ins

If the state in which the vehicle will be titled, registered and used allows a trade-in allowance to reduce the taxable price of the purchased automobile, Ohio will allow it.

Only in South Carolina are rebates and other cash-back offers (paid by someone other than a dealer) allowed to reduce the taxable amount of the sale.

Interested buyers

Still interested in purchasing a car in Ohio? If so, and if you live in one of the seven states listed above, know the tax you will owe: read the information notice.

Ohio sellers

If you are in the business of selling cars in Ohio, know the proper amount of tax you're required to collect from nonresidents intending to take the vehicle out of state for use, registration and titling. Read that information notice.

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photo credit: rbatina via photopin cc


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.