It depends. A high dollar car might be deemed to be a collector item and subject to the special 28% tax rate. I'm a little unclear on the rules around that so if you have a big buck car you should talk to a CPA. Most used cars sell for less than their purchase price so nobody pays any attention to that stuff. If you have a hobby car that sells for more money than you have in it then you should declare the income but it really depends on how good your paperwork is. If the car is an asset in a business then you have a different set of rules to follow. I sold my Duster this year so I'll need to declare that as income for my business but I wrote off all of the build expenses so it all kind of evens out in the long run.