The Best and Worst States to Buy a Car in 2025: Navigating Taxes, Fees, and Inventory

When it comes to purchasing a new or used car, the state you’re in can make a significant difference in terms of taxes, fees, and available inventory. We’ll take a look at the best and worst states to buy a car in 2025, focusing on factors like sales tax, insurance costs, documentation fees, and overall car supply. Let’s dive in and see how your state stacks up.

Best States to Buy a Car in 2025

First, let’s explore the states that offer the most advantages when it comes to car buying. States like Alaska, Montana, Oregon, Delaware, and New Hampshire stand out due to their lack of statewide sales tax, as well as generally low fees when buying and registering a car. South Dakota and Iowa are close behind.

Several other states have low state sales tax rates, but many have higher fees that keep them out of our top rankings: Alabama (2%), Colorado (2.9%), Hawaii (4%), Louisiana (4%), Missouri (4.23%), New Mexico (4%), New York (4%), North Carolina (3%), Oklahoma (3.25%), South Dakota (4%), and Virginia (4.15%). However, local taxes can drive costs higher, especially in big cities and affluent suburbs.

Dealerships charge a documentation fee, or “doc fee,” to cover the cost of preparing and filing a sales contract. Many states don’t regulate doc fees, and the amount varies from state to state. In many cases, state taxes and registration fees can outweigh the advantages of low doc fees.

These states have the lowest doc fees in 2025, and as a result, are better states to buy a car in: Minnesota ($75), Arkansas ($110), Oregon ($115), South Dakota ($115), Iowa ($135), Texas ($150), Washington ($150), Indiana ($150). California is also on the list with a very low average doc fee of $85, but the high sales tax and low supply of new cars keeps it far off of the list of best states to buy a car in. 

Car Dealer Doc Fee by State

Worst States to Buy a Car in 2025

Now, let’s take a look at the states you might want to avoid when purchasing a vehicle. Documentation fees can be particularly high in Florida, Alabama, Virginia, and North Carolina, with fees ranging from $485 to $995. Florida stands out as one of the worst states for new car purchases, with no cap on doc fees (averaging $995). When it comes to vehicle registration, a few states stand out with costly fees:

• Mississippi: $719 average registration fee
• Wyoming: $616 average registration fee
• Colorado: $595 average registration fee
• Arizona: $564 average registration fee
• California: $524 average registration fee

Alabama, North Carolina, Iowa, and Florida aren’t far behind with registration fees all averaging over $300.

It’s important to point out that taxes and fees are only part of the picture. The existing supply of new cars in each state is also critically important. Nationwide, there’s an 83-day supply of new cars as of late May 2025. However, some states have might tighter supply. These are the states with the lowest supply of new cars in 2025:

• Mississippi (72 days)
• West Virginia (73 days)
• Indiana (76 days)
• Kentucky (77 days)
• Michigan and Missouri (78 days)
• Alabama, Arkansas, Florida, and South Carolina (79 days)
• California and North Carolina (80 days)

With doc fees, registration fees, sales tax, and new car inventory all taken into consideration, it’s safe to say that the worst states to buy a car are: Mississippi, Florida, California, and North Carolina.

However, Florida’s abundant used car market can make it a better choice for used car buyers, thanks to the state’s older population. On the other hand, flood cars are a much bigger risk in Florida’s used car market.

Car Buying Help Is Here

Ready to outsmart the dealerships? With CarEdge Negotiation Expert, we’ll negotiate your car price to lock in big savings. Looking for a DIY path to savings? Shop confidently with CarEdge Insights, our most affordable option for empowered car buying. Looking to lease? We can help with that too!

Learn more about CarEdge’s car buying help →