in-20261007-IR-045260371NRA: DEPARTMENT OF REVENUE

DEPARTMENT OF REVENUE Information Bulletin #84 Sales Tax May 2026 Effective Date: Upon Publication (Replaces Bulletin #84, dated April 2023) SUBJECT: Sales Tax Collection on Sales of Motor Vehicles REFERENCES: IC 6-2.5-2-3; IC 6-2.5-9-12 DISCLAIMER: Information bulletins are intended to provide nontechnical assistance to the general public. Every attempt is made to provide information that is consistent with the appropriate statutes, rules, and court decisions. Any information that is not consistent with the law, regulations, or court decisions is not binding on either the department or the taxpayer. Therefore, the information provided herein should serve only as a foundation for further investigation and study of the current law and procedures related to the subject matter covered herein. SUMMARY OF CHANGES Apart from technical, nonsubstantive changes, this bulletin has been changed to provide guidance on legislative changes included in Senate Enrolled Act 243 (2026) creating restrictions on the purchases of motor vehicles by nonresident limited liability companies, partnerships, corporations, or other closely held businesses. INTRODUCTION As a general matter, the sales tax rate imposed on all retail transactions in Indiana is 7%. However, Indiana sales tax is imposed at a special rate on sales of motor vehicles that will be titled and registered in another state within 30 days, which is the state-level sales tax rate of the state in which the vehicle will be titled and/or registered. NOTE: A similar special tax rate is available for nonresident purchasers of recreational vehicles and trailers that will register their vehicles in a nonreciprocal state. For more information, consult Sales Tax Information Bulletin #72, available online at in.gov/dor/resources/tax-library/information-bulletins/sales-tax-information-bulletins/). DEFINITION The term "motor vehicle" means a vehicle that would be subject to the annual license excise tax imposed under IC 6-6-5 if the vehicle were to be used in Indiana. This includes cars, motorcycles, and trucks weighing 11,000 pounds or less. This does not include motor homes; trucks weighing greater than 11,000 pounds; or trailers. DETERMINATION OF THE SPECIAL TAX RATE When the purchaser of a motor vehicle intends to both (a) transport that motor vehicle to a destination outside Indiana within 30 days after delivery, and (b) title and register that motor vehicle for use in another state or country, the rate at which Indiana sales tax is to be imposed and collected on the sale is the rate of the intended destination state or country. The sales tax rates of the other states are inclusive of only state-level rates. Any locally imposed sales tax rates in the other states are not included in the rates Indiana dealers will be required to collect. Additionally, the statutory language of IC 6-2.5-2-3 requires the application of the destination state's state-level sales tax rate only to the sale of a motor vehicle that is to be titled and registered for use in another state. Accordingly, the destination state's sales tax rate is the only aspect of that state's laws that will be incorporated by virtue of IC 6-2.5-2-3. The statute does not require the incorporation of other aspects of a state's laws relating to transactions involving vehicles, such as other states' trade-in rules, caps on tax, and exemptions. An Indiana dealer will only be required to collect sales tax at the destination state's rate up to Indiana's rate of 7%. Regardless of whether the destination state's or country's rate is greater than 7%, the maximum sales tax rate to be imposed on the purchase of a vehicle from an Indiana dealer is 7%. If the destination state does not impose a sales tax, either in general or on purchases of vehicles, then no sales tax is to be collected by the Indiana dealership. However, dealers should be aware that effective July 1, 2023, if the vehicle is: it is presumed that the purpose of such registration and titling was to evade paying Indiana sales tax (unless another exemption applies). Any purchase of a vehicle made by an Indiana resident under this scenario made after June 30, 2023, is subject to collection of any unpaid Indiana sales or use tax on the transaction and any penalty permitted to be applied to the purchase under IC 6-8.1-10. Beginning July 1, 2026, the purchaser will also be subject to a $500 penalty for each transaction made after June 30, 2026. Lastly, these statutes and the administration thereof apply only to transactions that are sourced to Indiana. For further information related to sourcing of sales, refer to Sales Tax Information Bulletin #96, available online at in.gov/dor/resources/tax-library/information-bulletins/sales-tax-information-bulletins/. More to the point, these statutes apply only to intrastate transactions in which the customer actually receives the vehicle here in Indiana. Nothing about this statutory regime impacts transactions that are in interstate commerce. For further information related to sales made in interstate commerce, refer to Sales Tax Information Bulletin #28S, available at the link above. ADMINISTRATION When an Indiana dealership sells a motor vehicle to a customer who intends to title and register the vehicle for use in a state other than Indiana, the dealership and customer must complete Form ST-108NR, available online on the department's website at in.gov/dor/tax-forms/sales-tax-forms/. The dealership must keep a copy of each completed ST-108NR on file to document the buyer's information and the amount of tax collected for each transaction. If you have any questions concerning this bulletin, please contact the Tax Policy Division at taxpolicy@dor.in.gov. _________________________