If you are looking to learn how to avoid paying taxes on used cars you may be out of luck. Taxes will be paid on used car sales. However, there are ways you can reduce how much tax you pay. By trading in your current vehicle when purchasing a new one, you can save on tax. Keep in mind, this may not be ideal if you are trading in a vehicle with negative equity. Our post, What Happens When You Trade in a Car You are Still Financing, offers insight into what you can expect when it comes to trading in your vehicle.