California Excise Tax

The California excise tax applies to the car’s purchase price and the value of the real estate you’re purchasing. However, you may not know what the excise tax is unless you know what it is.

Excise taxes are legislated taxes on various goods, services, and activities. In our post, we want to give you more information about the California excise tax and how it works.

California Vehicle Excise Tax

Are you driving a car that’s not registered in your name? You might be wondering if you need to pay an excise tax. Depending on your lease agreement, the company may pass this tax to the driver. If so, you should contact the leasing company to determine what steps to take.

California collects 7.5 percent sales tax on all vehicles, with an additional 1.25% going to the local governments. You can also expect to pay a 50-dollar emissions testing fee upon purchase. Other car-related fees can add up too. Some dealerships charge a documentation fee to cover the cost of completing paperwork. These fees are separate from any DMV fees.

You should contact the local assessor’s office if you have not received a bill. You can also ask about a decrease. If your vehicle is over 10 years old, you’ll be required to pay more.

California Gasoline Excise Tax

People in California pay an extra 70.95 cents per gallon at the pump, attributable to state and local taxes and fees. California’s state excise on gasoline is 53.9 cents per gallon (as of July 1, 2022). Based on the numbers from the nonpartisan Legislative Analyst’s Office, California’s cap-and-trade auction raises the price of gasoline by an additional 23 cents per gallon. In addition, the gasoline excise tax adds another 18.4 cents per gallon to the cost at the pump.