Where to Buy Your Next Car on a Budget: States That Won't Drain Your Wallet

Finding the best state to buy a car isn’t just about shopping around—your geographic location can dramatically affect your total expenses. With new vehicle prices averaging $48,451 nationally, the difference between purchasing in various states can easily reach thousands of dollars, making location strategy a critical part of smart car buying.

Why Geography Matters for Your Car Purchase

State-by-state variations in pricing, taxation, and dealership fees create significant disparities in what buyers ultimately pay. A vehicle costing one amount in a neighboring state could be substantially more expensive just across the border. Understanding these regional differences can save savvy consumers a considerable sum.

The Tax Factor: How Sales Levies Shape Affordability

Sales tax rates vary dramatically across America, from zero in certain states to over 7% in others. When combined with dealer fees and vehicle pricing, these taxes compound into meaningful savings or additional costs. Some states cleverly balance higher prices with low taxes, while others achieve affordability through entirely different mechanisms.

Top Budget-Friendly States for Car Buyers

Oregon (Most Affordable)

• No sales tax at all
• Average new car price: $51,299 | Used: $28,218
• Dealer fees: $353 (among the lowest nationwide)
• Oregon’s combination of zero taxation and exceptionally low dealership fees makes it the best state to buy a car overall, despite moderate vehicle pricing

Montana (Runner-Up)

• Zero sales tax applies
• Average new car price: $56,186 | Used: $30,906
• Dealer fees: $537 (third-lowest in the nation)
• Even with prices running 15%+ above national average, tax elimination and minimal dealer charges secure strong positioning

New Hampshire (Strong Third)

• No sales tax requirement
• Average new car price: $45,928 | Used: $25,263
• Dealer fees: $1,372
• Benefits from the lowest vehicle prices regionally plus tax advantages, though dealer fees are slightly elevated

Delaware (Mid-Range Option)

• Zero sales tax on vehicles
• Average new car price: $47,502 | Used: $26,129
• Dealer fees: $2,486
• Tax-free purchasing is offset by higher dealership charges, creating moderate overall affordability

Alaska (Mountain State Alternative)

• Minimal 1.81% sales tax
• Average new car price: $58,377 | Used: $32,111
• Dealer fees: $315 (lowest in entire country)
• Surprisingly competitive due to rock-bottom dealer fees that compensate for elevated vehicle pricing

Mid-Tier States Worth Considering

Hawaii offers vehicles priced 3.58% below national averages with a reasonable 4.44% sales tax. Virginia keeps pace with national pricing while maintaining moderate taxation and below-average dealer fees. Wisconsin provides low sales tax (5.43%) combined with reasonably priced inventory just 1.30% above the national standard.

New Mexico counters its higher sales tax (7.61%) with reasonable dealer fees and pricing only 4.79% above average. North Carolina rounds out the list with moderate fees that offset 7% sales taxation, and vehicle prices running roughly 3.4% above the national benchmark.

The Bottom Line

The best state to buy a car depends on your specific priorities—whether you prioritize tax elimination, low dealership markups, or below-average vehicle pricing. Tax-free states dominate the affordability rankings, with Oregon and Montana leading through their combination of zero taxation and minimal dealer charges. However, even mid-tier options can deliver substantial savings compared to higher-tax regions. Comparing your local costs against these alternatives could reveal significant opportunities for informed car buyers willing to consider their purchase location strategically.