You pay the tax rate for the state where the boat will be domiciled. Eclipse, you cannot pick which state you pay sales tax in. If the boat is going to be staying in Alabama, you pay AL tax rate. The hundreds of dollars difference was going to be the city and county taxes that you were going to have to pay when you registered it in your home state that the other state was not authorized to collect. Example. My sales tax is 6.5%. 6% state and 0.50% county. If I buy a boat in TN, I can elect to not pay the tax in TN and just pay the full 6.5% when I get the boat home and register it. Or, I can pay the 6% FL tax rate on the sale in TN and TN will remit those monies to FL on my behalf, and then I pay the Remaining 0.50% county tax here at home when I register the boat. The sales tax is the same either way. Only time there could be a difference is on non registered/non tagged assets like 4 wheelers.