California Tax On Cars And Other Automobiles


california state automobile taxes

David Yee, an auto broker serving the Los Angeles and Southern California region, explained some of the impact that California has on automobile taxes and why they favor leasing versus buying new cars and SUV’s in many instances.  If you are considering buying or leasing a new automobile in the Southern California area then call or text David at (323) 723-4227 (4CAR).

Here is his explanation:


While the cost of ownership is cheaper in the long run if you plan to lease for eight years, leasing allows you to pay less in taxes on the vehicle overall.

If you purchased your car and sold or traded it in for another vehicle in five years, you’d have to pay a 10% tax on the new vehicle purchase price all over again.

If you purchased another $50,000 vehicle, it would mean that you spent an additional $5,000 in taxes on top of the $5,000 you paid on the previous car. That’s 10,000 in total taxes in five years’ time, at least in the state of California.

Other states offer “Tax Credits” that can be redeemed by trading in your vehicle or showing proof that you sold it. You will then pay the difference in value. For instance, a $50,000 vehicle purchased five years ago is now worth $15,000, which you then traded or sold, then purchased a new $50,000 vehicle shortly after. In that case, you would only be liable for your taxes on the $35,000 difference as opposed to the full $50,000 balance like California tax law dictates.

There will be more on this topic of California automobile taxes (purchasing versus leasing) in future posts on this website.