We’ve all experienced sticker shock — that sinking feeling in your stomach when you realize something is more expensive than you expected. Maybe you misread the menu when you ordered that bottle of wine, or you got a bill in the mail at your last dental visit! If it feels like everything is more expensive lately, you’re wrong. According to NerdWallet, average prices have risen more than 26% since 2019, and the rate of inflation for some goods is much higher.
At the beginning of this year, the average price of a new car reached $49,000. Automakers have programs to help you get into a new car, but the final price you’ll pay for any car varies from state to state. That’s because each state sets its own sales tax rate. If you’re lucky enough to live in Delaware, Oregon, Alaska, New Hampshire, or Montana, you won’t pay any sales tax when you buy a car. You’ll pay that sales tax in 45 other states, though, and one state is paying a higher rate than any other.
It’s not California, where you’ll pay the highest gas prices, or Hawaii, considered by many to be the most expensive state to live in. Residents of one midwestern state pay the highest sales tax on automobiles than any other: Kansas. Kansas buyers pay 7.5% sales tax when they buy a car. California is second, with a tax rate of 7.25%, and Georgia, Indiana, Rhode Island, and Tennessee share third place, charging 7%.
Taxes and other considerations
A 7.5% tax rate has the potential to add thousands to your car purchase. According to Kelley Blue Book, there are no new cars sold in the US for less than $20,000. The least expensive new car on the market in 2026 is the Hyundai Venue, with a starting MSRP of $20,550. If you bought that car in Kansas, the 7.5% tax rate adds more than $1,500 to the final price. If your new car costs $30,000, the sales tax will be over $2,200.
Sales tax isn’t the only thing that increases the final price you pay. You may have little bargaining power on the sale price, but if you’re paying for your purchase, you’ll want to shop around to get the best interest rate for your loan. The seller may also try to sell you additional warranties, features, or services, and those can add up quickly. You’ll also likely pay title and registration fees, documentation fees, and possibly a fee to transfer your license number. Your insurance premium will also change, and will likely increase if you trade in an old car for a new one.
To determine what you can afford, do your research on your state’s sales tax rate and surcharges. You can call your insurance company to get a new car discount, and it’s always a good idea to shop around for the best loan, rather than relying on the salesperson to do the research for you.