State and Local Taxes

• As of 2011, Tennessee car buyers must pay state sales tax of 7.25 percent. In addition, cities may impose local taxes. Local taxes can range from 1.5 percent to 2.75 percent, according to Cars Direct. If you buy a car from out of state -- for example, if you purchase your vehicle online -- you do not have to pay local taxes, but do have to pay Tennessee state taxes.
  
  

Out-of-State Buyer

• If a buyer purchases a vehicle in Tennessee for use in another state, the buyer is exempt from Tennessee's sales and use tax as long as he takes the vehicle out of state within three days of purchase. To qualify for this exemption, the buyer must sign an affidavit at the time of purchase stating that he intends to take the vehicle out of state and specifying a city and state of delivery. If the vehicle would be exempt from Tennessee registration requirements if it stayed in Tennessee, it does not qualify for this exemption.
  
  

Other Exemptions

• Tennessee has a number of other exemptions to vehicle sales and use tax. If a military member who lives in another state but is stationed in Tennessee buys a vehicle in Tennessee, she does not have to pay sales and use tax in Tennessee. This exemption also applies to members of the National Guard stationed in Tennessee. In addition, if you give your car to your ex-spouse because of a divorce, neither party has to pay sales and use tax on the vehicle.
  
  

Common Carrier Exemption

• Tennessee does not charge sales tax on common carrier vehicles. Common carrier vehicles must be at least Class 3 vehicles by weight and must principally transport cargo or passengers between states under the authority of the federal or Tennessee government. These vehicles, which are typically trucks or trailers, must be used for these purposes at least 51 percent of the time to qualify for this exemption.