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Unfortunately, you were subject to the tax and had to pay it. Louisiana assesses a 4% state use tax on all motor vehicles that are brought into the state by new residents. In addition, the individual parishes can assess a 1% to 5.5% tax on top of this. The State of Louisiana allows a credit of up to 4% for taxes paid to other states if that other state allows a similar credit for Louisiana residents who move to that state.
Unfortunately, Indiana allows no such credit or exemption. The Indiana law states that, absent a statutory exemption, all sales of motor vehicles and trailers purchased in Indiana are subject to Indiana sales and use tax. This includes sales where the purchaser intends to immediately register, license and/or title the motor vehicle or trailer for use in another state.
So, since Indiana allows absolutely no credits for anyone, then Louisiana will not give you the credit either.
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Thank you for your quick answer. But I paid for 9% automobile tax in Louisiana instead of 4%. So, I wonder where the 4% comes from.
As I stated above, the State of Louisiana assesses a 4% state use tax rate. The local parishes also assess a local use tax. This can range from 1% to 5.5%. You must have moved into a parish that has a 5% use tax rate. The 4% state tax rate plus the 5% parish rate gives you the 9% rate that you paid.
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so, what is your best advice for avoiding double taxation on automobile purchase?
Short of not buying it in Indiana, I don't think that there is much you can do.
Louisiana is going to tax you at 9% on your car purchase. That is the MINIMUM that you can pay. If you buy from a dealer that is in a state that has a tax agreement with Louisiana, then you can get a maximum of 4% credit against the 9%, but you have to pay that 4% or more to get that credit. The credit is limited to the lesser of 4% or the amount of tax you paid to the other state, and like I said, that is limited to the few states that have agreements with Louisiana.
So, I guess that Louisiana is trying to make sure that people buy cars in Louisiana!
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