Determining the vehicle excise tax in Massachusetts involves a straightforward process. The state levies a 6.25% sales tax on the purchase price of a vehicle. For example, if a car costs $20,000, the sales tax would be $1,250. This amount is added to the purchase price and paid at the time of registration. In addition to the sales tax, municipalities also levy an annual excise tax based on the vehicle’s value.
Accurate computation of this tax is crucial for both buyers and sellers. Understanding the total cost of vehicle ownership, including taxes, allows buyers to budget effectively. For sellers, providing clear and accurate tax information can facilitate smoother transactions. Historically, sales tax has been a significant revenue source for state governments, funding essential public services like infrastructure and education. The implementation of a statewide sales tax on vehicles ensures a consistent and predictable revenue stream for the Commonwealth.