Who does this tax
affect?
It affects everyone trading in a vehicle towards the purchase of a new or
pre-owned vehicle.
What is changing?
Under current law, your trade allowance (vehicle value) reduces the overall
amount of sales tax you pay on the vehicle purchase. However, under new law
your trade allowance is capped at $10,000.
How much will this
new law cost me?
Currently there is no sales
tax on your car's trade value since the allowance reduces your overall taxable
amount. Starting January 1, 2020, your vehicle trade allowance over $10,000
will not count as a credit and you will be taxed on the purchase price minus
$10,000. Examples are below.
|
Current Tax Credit |
New Tax Credit |
||
|
Vehicle Sale Price |
$60,000 |
Vehicle Sale Price |
$60,000 |
|
Trade-In Allowance |
$35,000 |
Trade-In Allowance |
$35,000 |
|
Trade-In Tax Credit |
$35,000 |
Trade-In Tax Credit |
$10,000 |
|
Taxable Amount |
$25,000 |
Taxable Amount |
$50,000 |
|
Tax Paid |
$1,812 |
Tax Paid |
$3,625 |
What can you do?
If you intend to upgrade your current vehicle we recommend you do so before
January 1, 2020. Taking advantage of the current tax law can save you thousands
on your purchase.
