Indiana Used Car Sales Tax 2026: 7% Rate, Trade-Ins, BMV Rules

Indiana charges a flat 7% sales tax on a used car, with no county or city sales tax on top, and you get credit for a like-kind trade-in at a dealer. Buy from a dealer and they collect it. Buy from a private seller and you pay the 7% at a BMV branch when you title the car, which has to happen within 45 days. Then comes a second, separate tax most people forget: the annual vehicle excise tax you pay every year at registration. Figures here are as of Oct 19, 2026.

I read the Department of Revenue's Sales Tax Information Bulletin #28S (the May 2026 version), the BMV's buying-and-selling and excise tax pages, the use tax statute and the BMV exemption form on Oct 19, 2026. Indiana's system is simpler than most, but the private-sale rules can still cost you if you show up with the wrong paperwork.

The 7% and how dealers figure it

The state rate is 7%, and the Tax Foundation's 2026 table shows Indiana with no average local sales tax, so the rate is the same in Gary as in Evansville. A dealer collects it and gives you Form ST-108 showing the tax was paid. DOR's bulletin walks through what reduces the taxable price.

A dealer discount comes off the price before tax.
A manufacturer's rebate does not, even if you sign it over to the dealer.
A like-kind trade-in comes off, as long as the trade is titled in your name. A married couple counts as one owner if they show a marriage license and the same address.
Negative equity rolled into the new loan isn't taxed, and if your trade is worth more than the car you're buying, the taxable amount is zero.

DOR's own example: a $12,000 car, a $500 dealer discount and a $4,000 trade-in leave $7,500 taxable. At 7% that's $525 in tax, against $840 with no discount or trade. Note that a car-for-motorcycle swap doesn't count as like-kind, so that trade won't cut the tax.

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Private sales are paid at the BMV

When you buy from a private seller, nobody collects tax at the handshake. You pay it at a BMV branch when you apply for the Indiana title, and the BMV says that application is due within 45 days of the purchase or you'll owe an administrative penalty. This is the step that burns people. Under IC 6-2.5-3-6, the titling agency starts from the presumption that you paid the average selling price in its used vehicle guide. It switches to your real price only if you bring documentation that proves it, and the state rule calls for a seller-signed affidavit of the selling price. Write the true price on a bill of sale, get both signatures, and keep a copy of the payment. A "$500 between friends" note on a car the guide values at $9,000 won't hold up, and you'll pay tax on the guide value.

Our Indiana private-sale title transfer guide lists the rest of what to bring.

Gifts, inheritances and new residents

Indiana's exemption form, ST-108E, lists a vehicle transferred from one person to another with no consideration, as an outright gift or an inheritance, as exempt. Read the wording closely. If you take over the loan payments, that counts as consideration and the exemption doesn't apply, unless you were already on the original security agreement. New Indiana residents aren't charged sales tax when they move a car titled in their old state over to an Indiana title. If you bought out of state, Indiana credits tax paid to the other state and you pay only the difference if that state's tax was lower. DOR also flags the out-of-state LLC trick. An Indiana resident who titles a car through an LLC in a no-sales-tax state is presumed to be dodging the tax, and from July 1, 2026, the buyer also owes a $500 penalty per transaction on top of the tax owed.

The yearly excise tax

Every year at registration you pay a vehicle excise tax, based on the car's class and age. The class comes from the original MSRP, not what you paid, and the tax drops as the car gets older. A few rows from the BMV's passenger vehicle table show the range.

Class 9 ($10,000-$12,499 original price) -- $150 new, $65 at age 5, $12 at age 9 and up.
Class 15 ($30,000-$34,999) -- $406 new, $169 at age 5, $42 at age 9 and up.
Class 17 ($42,500 and over) -- $532 new, $242 at age 5, $50 at age 9 and up.

Some counties and cities add their own excise or wheel tax. When you sell a car, you can apply for a partial excise credit or refund with State Form 55296 and proof of sale.

A quick checklist

Signed title with both seller and buyer sections complete.
A bill of sale with the real price, plus proof you paid it.
ST-108 from a dealer, or the ST-108E exemption form for a gift.
A history report run before you pay, because a branded car sells cheap and costs you later.

If the car has a rebuilt brand, read our Indiana salvage and rebuilt title rules first. Our general used car sales tax guide explains how other states handle the same questions. Check the title on NMVTIS too.

CarVins is a licensed CARFAX and AutoCheck reseller with no affiliation to CARFAX, AutoCheck or Experian. As of mid October 2026 a guest report was about $5.50, a member report about $4.50 and both together about $6.75, compared with roughly $39.99 to $44.99 at retail. Confirm it at checkout.