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Dealer fee and service contract tax treatment by state
Whether the dealer documentary fee and a service contract are taxed on a used-car sale, for every state and DC.
Last checked November 14, 2026
Two questions cause the most mistakes on a deal: is the documentary or administrative fee part of the taxable amount, and is a service contract taxed? The answer depends on the state.
| State | What the fee is called | Dealer fee | Service contract |
|---|---|---|---|
| Alabama | Dealer / documentary fee | Taxed | Not taxed |
| Alaska | Dealer documentation fee | Not taxed | Not taxed |
| Arizona | Document fee | Not taxed | Not taxed |
| Arkansas | Service and handling fee | Taxed | Taxed |
| California | Dealer document processing charge | Taxed | Not taxed |
| Colorado | Documentation fee | Taxed | Not taxed |
| Connecticut | Dealer conveyance fee | Taxed | Taxed |
| Delaware | Dealer administrative fee | Not taxed | Not taxed |
| District of Columbia | Dealer documentary fee | Not taxed | Not taxed |
| Florida | Dealer fee | Taxed | Taxed |
| Georgia | Dealer administrative fee | Taxed | Not taxed |
| Hawaii | Documentary fee | Taxed | Taxed |
| Idaho | Dealer document preparation fee | Taxed | Not taxed |
| Illinois | Documentary fee | Taxed | Not taxed |
| Indiana | Documentary fee | Taxed | Not taxed |
| Iowa | Documentary fee | Not taxed | Not taxed |
| Kansas | Administrative and handling fee | Taxed | Taxed |
| Kentucky | Documentary fee | Taxed | Not taxed |
| Louisiana | Documentary fee | Taxed | Not taxed |
| Maine | Document preparation fee | Taxed | Taxed |
| Maryland | Dealer processing charge (not required by law) | Taxed | Not taxed |
| Massachusetts | Documentary fee | Taxed | Not taxed |
| Michigan | Documentary preparation fee | Taxed | Not taxed |
| Minnesota | Documentary fee | Not taxed | Not taxed |
| Mississippi | Document / service fee | Taxed | Not taxed |
| Missouri | Administrative fee | Taxed | Not taxed |
| Montana | Documentary fee | Not taxed | Not taxed |
| Nebraska | Document processing charge | Taxed | Taxed |
| Nevada | Documentation fee | Taxed | Taxed |
| New Hampshire | Documentary fee | Not taxed | Not taxed |
| New Jersey | Documentary service fee | Taxed | Taxed |
| New Mexico | Dealer transfer service fee | Not taxed | Not taxed |
| New York | Dealer processing fee | Not taxed | Taxed |
| North Carolina | Administrative / document fee | Taxed | Not taxed |
| North Dakota | Documentary fee | Not taxed | Not taxed |
| Ohio | Documentary service charge | Not taxed | Taxed |
| Oklahoma | Documentary fee | Not taxed | Not taxed |
| Oregon | Document processing fee | Not taxed | Not taxed |
| Pennsylvania | Documentary preparation fee | Not taxed | Not taxed |
| Rhode Island | Documentary preparation fee | Taxed | Not taxed |
| South Carolina | Closing fee | Not taxed | Not taxed |
| South Dakota | Documentary fee | Taxed | Taxed |
| Tennessee | Documentary fee | Taxed | Taxed |
| Texas | Documentary fee | Not taxed | Not taxed |
| Utah | Dealer documentation fee | Taxed | Taxed |
| Vermont | Documentation fee | Taxed | Not taxed |
| Virginia | Processing fee | Taxed | Not taxed |
| Washington | Documentary service fee | Not taxed | Taxed |
| West Virginia | Documentary fee | Not taxed | Not taxed |
| Wisconsin | Service fee | Taxed | Taxed |
| Wyoming | Documentary fee | Taxed | Not taxed |
Tips
- State the dealer fee on its own line. Several states require it, and some only exempt it from tax when it is stated separately.
- Where a service contract is taxed, the rate or caps can differ from the car's rate.
- Optional items you sell, such as GAP, are treated differently from state to state. Confirm before assuming they are untaxed.
Rules change and have exceptions. This table summarizes the rules DMS Apex uses to work out a standard used-car sale and is not legal or tax advice. Confirm current requirements with your state agency or an accountant, and re-check every January.
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