You May Want to Make Your New Car Purchase Before April 1st or May 19th Due to New California Tax Hikes

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In an effort to help close the $41 billion California budget deficit, the legislature raised the sales tax rate by 1 cent, or 13%, and the annual car license fee by 77%.  The sales tax increase goes into effect April 1st 2009, and the car license fee increase goes into effect May 19th, so you may want to keep this dates in mind if you are planning a major purchase, especially an auto purchase.

Under the old formula, a car buyer in Orange County paid $1,938 in taxes on a $25,000 car. The new formula means that buyer will pay $2,188, or $250 more.

On a new car valued at $25,000, the vehicle license fee will go from $163 (0.65 percent of the value) to $288 (1.15 percent of the value).

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