Some of the most expensive and least expensive states in which to own a vehicle share a border.
Owning a vehicle comes with a myriad of costs; the price you pay for the car itself is just a drop in the bucket.
Of course, we all are wise enough to budget for fuel and insurance, but one of the biggest costs that comes with car ownership varies widely from state to state. That would be sales and excise taxes.
Due to the variation in taxes and other variables, the added costs to own a car in the least pricey state, New Hampshire, is only about half that of owning the same car in the most expensive state, Michigan.
This list was compiled by gobankingrates.com. The study compiled the following six parameters for each of the nation’s fifty states:
- Car sales tax
- Title fees
- Registration fees
- Average annual car insurance premiums
- Annual gas expenses
- Average car maintenance and repair costs
The upshot is that the three-year cost to own a vehicle with today’s average sell price of about $33,500 averages $11,227. That does not include the cost of the vehicle itself! The added three-year costs of owning a vehicle in Michigan are $15,314. In New Hampshire, the least expensive state, the added three-year costs are $8,098. This is mainly due to New Hampshire being one of the four U.S. states that does not levy a sales tax on automobiles.
Sales tax is the main culprit.
Take Massachusetts for example. The sales tax, due at the time of purchase, but which can be financed (making it even more costly) on the average vehicle is $2,093. None of which is earmarked for road repair and maintenance by the state.
In addition, the state levies a 2.5% excise tax each year on the value of the automobile, so in year one, the cost is $837.50. It is easy for new-car buyers to forget to budget an extra three grand just to pay the first year taxes on their new ride.
Interestingly, those that trade in a vehicle to a Mass. dealer only have to pay tax on the difference in value of the new vehicle and the trade. So, for example, if one were to trade in a $10,000 vehicle on a purchase of a$33,500 vehicle that new car buyer will only pay tax on $23,500.
However, if one sells their car to a private party and then buys a new car that day, the buyer pays tax on the full cost of the new vehicle. This proves that not only are new car costs high, but they vary even depending upon how one buys a vehicle.