Private Party Car Sale: Taxes, Paperwork, and Bill of Sale by State
June 10, 2026 · 6 min read
What every private buyer and seller needs to know about sales tax, bills of sale, and title transfer requirements.
Sales tax: who pays and how
In 45 of 50 US states, the buyer pays sales tax when they register the vehicle, not at the point of sale. The tax is calculated on the sale price or the state's minimum book value (whichever is higher).
The five states with no statewide sales tax on vehicles: Alaska, Delaware, Montana, New Hampshire, and Oregon. Even there, local fees may apply.
Selling at a low price to dodge tax usually doesn't work — most state DMVs use book value when the reported price is suspiciously below market.
The bill of sale
A bill of sale is the legal record of the transaction. Required content in nearly every state: buyer and seller full names and addresses, vehicle year/make/model/VIN, odometer reading at sale, sale price, date, and both signatures.
Notarization is required in: Arizona, Kentucky, Louisiana, Maryland, Montana, Nevada, Ohio, Oklahoma, Pennsylvania, West Virginia, and Wyoming. Always check your state's current DMV instructions before the meeting.
Keep a signed copy. Many state DMVs require submitting the bill of sale at registration; both parties should retain originals.
Title transfer essentials
The seller signs the title in the assignment section — DO NOT sign anywhere else and follow the printed instructions exactly. Mistakes can require ordering a duplicate title, which delays registration by weeks.
Most states require the seller to file a Notice of Transfer or Release of Liability with the DMV within 5–30 days. This is the single most important step for the seller — it ends your liability for anything the new owner does with the car (tolls, parking tickets, accidents).
The buyer typically has 10–30 days to register and pay sales tax. Late penalties run $50–250 depending on state.
Odometer disclosure
Federal law (49 CFR 580) requires an odometer disclosure for any vehicle under 20 model years old. The disclosure is part of most state titles or attached as a separate federal form. Falsifying it is a federal crime.
For vehicles 20+ model years old (model year 2006 or older in 2026), federal odometer disclosure is not required, but many states still require the reading on the bill of sale.
Out-of-state sales
The buyer pays sales tax in their home state, not the state of purchase. A buyer driving the car home will usually need a temporary trip permit from the seller's state DMV (instant, $5–25).
Some states (notably California) have strict emissions rules that block registration of out-of-state vehicles. Verify before you buy.