When it comes to purchasing a vehicle, the state you choose to buy from can significantly impact the overall cost. Factors such as sales tax, registration fees, and dealership charges can vary widely across the United States. For 2025, our analysis reveals that Oregon stands out as the cheapest state to buy a car, followed closely by New Hampshire and Montana. This blog post will delve into the reasons behind these rankings, explore the costs associated with buying a car in these states, and provide actionable tips for maximizing your savings.
1. Why Oregon is the Cheapest State to Buy a Car
No State Sales Tax
Oregon is unique in that it does not impose a statewide sales tax. This absence of sales tax can save buyers thousands of dollars, especially when purchasing a new vehicle. For example, if you were to buy a $35,000 car in a state with a 6% sales tax, you would pay an additional $2,100 in tax alone. In Oregon, that cost is eliminated.
Low Registration Fees
In addition to having no sales tax, Oregon's registration fees are relatively low, typically ranging from $500 to $700. This combination of no sales tax and low registration fees results in significant savings compared to other states. On average, buyers in Oregon can save over $3,500 compared to those in the most expensive states like Mississippi and Florida, which have high sales taxes and additional fees.
Lower Dealership Documentation Fees
Oregon also benefits from lower dealership documentation fees, which are often higher in states with more stringent regulations. This further reduces the overall cost of purchasing a vehicle in the state.
2. The Runner-Ups: New Hampshire and Montana
New Hampshire: A Close Second
New Hampshire is another state that offers significant savings for car buyers. Like Oregon, it has no state sales tax, which means buyers can avoid hefty tax burdens. The total additional costs for purchasing a car in New Hampshire range from $650 to $850, making it an attractive option for many buyers. The average savings compared to more expensive states is estimated to be between $3,000 and $3,500.
Montana: Tax-Free Purchases
Montana also ranks high on the list of cheapest states to buy a car, primarily due to its lack of a sales tax. The state has a unique system where buyers can register their vehicles for a flat fee, which can be advantageous for those purchasing more expensive cars. The average additional costs in Montana are similar to those in New Hampshire, making it a viable option for budget-conscious buyers.
Alaska and Delaware: Rounding Out the Top Five
Alaska and Delaware also feature in the top five cheapest states to buy a car. Both states have no sales tax, which is a significant advantage for buyers. However, it's essential to consider other factors, such as registration fees and the average price of vehicles, when evaluating overall affordability.
3. The Most Expensive States to Buy a Car
While some states offer incredible savings, others can be quite costly. Mississippi and Florida are the most expensive states for car purchases, primarily due to high sales taxes and additional fees that can add thousands to the overall cost. For instance, Mississippi has a sales tax of 7%, which can significantly inflate the price of a vehicle.
4. Nationwide Price Trends in 2025
As of 2025, the average new car transaction price in the United States is approximately $49,740. However, this figure can vary dramatically based on the state of purchase. The actual cost of a new car can differ by thousands of dollars due to state-specific sales taxes, registration fees, and dealer charges. Understanding these differences is crucial for making an informed purchasing decision.
Average Costs by State
- Oregon: Average new car price: $51,299; Dealer fees: $353
- New Hampshire: Average new car price: $45,928; Dealer fees: $1,372
- Montana: Average new car price: $56,186; Dealer fees: $537
- Alaska: Average new car price: $58,377; Dealer fees: $315
- Delaware: Average new car price: $47,502; Dealer fees: $2,486
These figures illustrate how the combination of vehicle price, dealer fees, and taxes can significantly affect the overall cost of purchasing a car.
5. Tips for Maximizing Your Savings
Compare Prices Across States
If you live near a state with lower taxes, consider purchasing your vehicle there. The savings from lower sales tax and registration fees can be substantial. Websites like Autotrader and Kelley Blue Book can help you compare prices across different states.
Negotiate Fees
Many dealership fees, such as documentation fees, can be negotiated. Don't hesitate to discuss these fees with your dealer to ensure you're getting the best possible deal.
Consider Out-of-State Purchases
Buying a car out of state can be a smart financial move, especially if you're considering states like Oregon or New Hampshire. However, remember that the sales tax you owe is based on where you register the vehicle, not where you buy it. Always check with your local DMV to understand the exact process and avoid unexpected costs.
Research Vehicle History
When buying a used vehicle, especially from out of state, ensure you check the vehicle's history report. Look for any red flags such as flood damage, accidents, or recalls. This step is crucial to avoid potential issues down the line.
Conclusion
In conclusion, if you're looking to buy a car in 2025, Oregon is the best state to do so, thanks to its lack of sales tax and low registration fees. New Hampshire and Montana also offer significant savings, making them excellent alternatives. Conversely, states like Mississippi and Florida should be avoided if you're looking to minimize your expenses. By understanding the costs associated with car purchases in different states and utilizing smart shopping strategies, you can save thousands on your next vehicle.
References
- CarEdge. (2025). The Cheapest States to Buy a Car in 2025. https://caredge.com/guides/cheapest-state-to-buy-a-car
- Bold Auto Transport. (2024). Best States to Buy a Car in 2025. https://boldautotransport.com/best-states-to-buy-a-car
- Nasdaq. (2023). 10 Least Expensive States To Buy a Car. https://www.nasdaq.com/articles/10-least-expensive-states-to-buy-a-car
- SGT Auto Transport. (2025). Buying a Car in Another State: Everything You Need to Know in 2025 Step-by-Step, Pros, Cons. https://sgtautotransport.com/autoblog/transport-tips/best-states-to-buy-a-car