Alabama car sales tax: rate, sourcing and what it applies to

• Alabama's rate is not a single statewide number — it is resolved from the ZIP code you register in, because local jurisdictions add to the state rate. Across Alabama the combined rate runs 2% to 7.5%, so where you register genuinely changes what you owe.
• The rate that matters is the one where you register the vehicle, not where the dealership sits. Buying out of your area does not change what you owe.

• Taxed on top of the vehicle price: the dealer doc fee and dealer-installed accessories.
• Not part of the taxable amount: extended warranties and service contracts.
• Your trade-in comes off before tax is calculated.

• Registering the car: in Alabama the dealer files your title application as the state's designated agent and issues a 20-day temporary tag. You take the paperwork to your county license office within 20 days to get your plate, and you pay the registration fee and the county's ad valorem tax there. The total includes the title and registration fees. It leaves out ad valorem tax, which depends on your county and the car's value.
• Alabama's sales tax on a car has three parts: the state's 2% automotive rate, your city's rate and your county's rate. The city and county rates for vehicles are often lower than their general rates. Across Alabama the total runs from 2% to 7.5%. It is 4.75% in Birmingham, 4% in Huntsville, 4.75% in Mobile and about 3.58% in Montgomery.
• The local part follows the dealership, not your home. A licensed Alabama dealer collects the state tax plus the tax of the city and county where the sale is made, and you cannot be charged a second city or county tax when you register. The calculator uses the rate for the ZIP you entered, which is right when you buy near home. If the dealer is in another city, its rate applies instead.
• Your trade-in reduces the taxable amount, on new and used cars, with no dollar limit. It has to be a vehicle traded for a vehicle, and the credit cannot be more than the price of the car you buy.
• Manufacturer rebates are taxed. Tax is figured on the price before a rebate you apply to the purchase. A dealer's own discount that lowers the selling price does reduce the tax, but a dealer 'rebate' you use as a down payment is treated like a manufacturer rebate.
• The doc fee has no cap in Alabama. Dealer fees, whatever the dealer calls them, are taxed at the same state plus local rate as the car.
• Accessories the dealer adds before the sale and lists on the invoice are taxed with the car at the automotive rate. Parts and accessories bought after the sale carry the 4% general state rate plus the general local rate. Service contracts, extended warranties, maintenance plans and GAP are not taxed.
• A title fee that is separately stated on the contract is not taxed. If it is not separately stated, it is.
• If you buy from a dealer outside Alabama, you pay the 2% state use tax plus your own city and county use tax at your county license office, with credit for tax you already paid the other state.
• Registration estimates: the plate fee shown is the full $23 for 12 months. You are charged by the month for the time left until your renewal month, so it may be less. A pickup over 8,000 lbs pays more, up to $105. Some counties add local fees.

Source: Alabama Department of Revenue — Sales and Use Tax Rates / Local Cities and Counties Tax Rates Text File · rules last verified Oct 11, 2026. Methodology.