Vehicle Tax Ontario — 2025 Complete Guide for Car Buyers

May 18, 2024

Introduction to Vehicle Tax Ontario

If you’re buying, selling, or registering a car in 2025, understanding vehicle tax Ontario rules is essential. Between HST, RST, and other registration fees, taxes can add thousands to the total cost of ownership.

In this detailed guide, FatCat Loans explains everything you need to know about vehicle tax in Ontario — including how it works for private sales, dealership purchases, trade-ins, imports, and electric vehicles. We’ll also show you how financing with FatCat Loans can help cover your tax and registration expenses more easily.

Key Highlights

→ Vehicle Tax Ontario includes a 13% HST on most dealership sales.
→ Retail Sales Tax (RST) applies to private car sales based on fair market value.
→ Trade-ins reduce the taxable amount, lowering your total cost.
→ Importing a vehicle from another province or the U.S. has its own tax rules.
→ FatCat Loans can help cover HST, registration, and other vehicle-related expenses.

Understanding Vehicle Tax Ontario

Ontario’s vehicle tax system combines several types of charges, depending on how and where you buy your car.

The Main Taxes Include:

• HST (Harmonized Sales Tax): 13% applied to all dealer vehicle sales.

• RST (Retail Sales Tax): Paid when you buy privately, calculated on the greater of the sale price or the Canadian Red Book wholesale value.

• Vehicle permit and plate fees: Charged at ServiceOntario when registering or transferring ownership.

These taxes and fees ensure proper registration and revenue collection under Ontario’s vehicle regulations.

1. Vehicle Tax Ontario for Dealership Purchases

When you buy a new or used car from a licensed dealer, you’ll pay 13% HST on the full purchase price.
The dealership collects and remits this tax on your behalf.

Example:

• Vehicle Price: $32,000

• HST (13%): $4,160

• Total: $36,160

Dealerships may include this HST within your financing amount, meaning you can spread the tax cost across your monthly payments.

💡 Tip: When you apply through FatCat Loans, your auto financing can include HST, registration, and even insurance — making budgeting simpler.

2. Vehicle Tax Ontario for Private Sales

If you buy a vehicle from another individual (not a dealer), you’ll pay Retail Sales Tax (RST) when you register the vehicle at ServiceOntario, not to the seller.

How RST Is Calculated:

RST is applied to the greater of:

• The purchase price listed on the bill of sale, or

• The vehicle’s wholesale value in the Canadian Red Book

Example:

• Purchase Price: $9,000

• Red Book Value: $10,200

• RST Owed (13% of $10,200): $1,326

You’ll also pay ownership transfer and plate fees at the same time, typically between $32 and $60, depending on your region and transaction type.

Family Exemptions:
If the vehicle is transferred between close family members — such as parents, spouses, or children — you may be exempt from RST. Documentation is required to prove eligibility.

3. Trade-Ins and Vehicle Tax Ontario

Trading in your current vehicle when buying a new one from a dealer can save you money. You only pay HST on the difference between the new car’s price and the trade-in value.

Example:

• New Car Price: $45,000

• Trade-In Value: $10,000

• Taxable Amount: $35,000

• HST (13%): $4,550

Without the trade-in, you’d pay $5,850 in HST — a savings of $1,300.

⚠️ Trade-in tax savings apply only to dealer transactions, not private sales.

4. Buying a Vehicle from Another Province

If you buy a car outside Ontario but within Canada, you’ll likely still pay 13% HST when you register the car in Ontario.

If the seller already collected provincial tax equivalent to 13% (e.g., Nova Scotia or New Brunswick), you generally won’t owe more.
But if you bought from a province with a lower tax rate (like Alberta’s 5% GST), you’ll pay the difference to Ontario when registering your car.

For example:

• Alberta car purchase: $25,000 + 5% GST = $26,250

• Ontario registration adds 8% = $2,000 more owed

5. Importing a Vehicle from the United States

Importing a car from the U.S. involves multiple taxes and inspection requirements.

Here’s what to expect:

• 5% GST at the border

• 8% Ontario portion upon registration (making the full 13% HST)

• 6.1% duty fee if the vehicle wasn’t made in North America

• Inspection fees and compliance costs for safety standards

You’ll need proof of ownership, title, and a recall clearance letter for registration.

👉 See full details at the Canada Border Services Agency (CBSA).

6. Electric and Hybrid Vehicle Rebates in Ontario

Although Ontario’s provincial rebate ended in 2018, the federal iZEV Program continues in 2025, offering up to $5,000 in rebates for qualifying zero-emission vehicles.

Eligibility Highlights:

• Must be a fully electric or plug-in hybrid model under $55,000 MSRP.

• The rebate applies at the point of sale, reducing your overall purchase price and taxes.

Learn more through Transport Canada’s iZEV Program.

7. Vehicle Registration and Licensing Fees

In addition to vehicle tax Ontario, buyers must register ownership and plates through ServiceOntario.

Typical fees include:

If you’re purchasing a used vehicle, you’ll also need:

• Used Vehicle Information Package (UVIP)

• Bill of Sale

• Safety Standards Certificate

8. Selling Your Vehicle Privately

When you sell a vehicle privately, you do not collect or remit taxes — the buyer pays RST at ServiceOntario.

As the seller, you must provide:

• The bill of sale

• A completed UVIP

• A valid safety certificate if the car will be plated again

This ensures the buyer can legally register ownership and pay the correct taxes.

9. How to Reduce Vehicle Tax and Ownership Costs

✅ Trade in your vehicle to reduce your taxable amount.
✅ Finance taxes through FatCat Loans so you don’t pay upfront.
✅ Check for rebates or exemptions before finalizing your purchase.
✅ Keep all receipts and UVIP documents for future reference.
✅ Compare lender offers — the right financing can offset high taxes with better terms.

How FatCat Loans Helps with Vehicle Tax Ontario

Taxes, registration, and dealer fees can add thousands to your car’s price — but you don’t need to pay them all at once.

With FatCat Loans, you can:

• Bundle HST, RST, and registration costs into your car loan.

• Get fast pre-approval for new or used vehicles.

• Access financing even with fair or rebuilding credit.

• Choose flexible repayment plans that fit your budget.

💡 Apply today at FatCat Loans and drive away without financial stress.

Frequently Asked Questions (FAQs) About Vehicle Tax Ontario

1. What is the vehicle tax rate in Ontario?

Ontario applies a 13% HST to all dealer vehicle sales, and RST (also 13%) to private sales during registration.

2. Do I pay tax on a used car in Ontario?

Yes. Used vehicles are subject to RST when purchased privately. Dealers include HST in the sale price.

3. How can I save money on vehicle tax?

Trade in your car, finance your taxes through FatCat Loans, or choose eligible electric models with federal rebates.

4. Are electric vehicles tax-exempt?

No, but you can apply federal rebates of up to $5,000, reducing your total cost.

5. Can FatCat Loans include taxes and fees in financing?

Yes. You can include HST, RST, licensing, and insurance costs in your vehicle loan through FatCat Loans.

Conclusion

Understanding vehicle tax Ontario helps you plan your next car purchase confidently. From dealership HST to private-sale RST, registration fees, and EV incentives, knowing the full picture ensures you stay on budget and avoid surprises.

By financing with FatCat Loans, you can manage vehicle taxes and related costs through flexible payment options — so you can focus on getting on the road, not stressing about the bill.

🚗 Ready to buy your next vehicle?
Let FatCat Loans handle the financing — including your taxes, registration, and insurance — so you can drive away sooner with confidence.