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For example, if your new car costs $20,000 and you have a trade-in worth $5,000, then you only have to pay sales tax on $15,000. If your sales tax rate is 10%, you're looking at savings of $500 in this particular case.
The following states currently allow a tax credit on your trade-in as of January 2011:
* The Potential Savings is based on a trade-in worth $5,000
| State | Maximum Tax Rate | Potential Savings * |
| Alabama | 10.5 | $525 |
| Alaska | 7.5 | $375 |
| Arizona | 11.73 | $587 |
| Arkansas | 11 | $550 |
| Colorado | 10.4 | $520 |
| Connecticut | 6 | $300 |
| Delaware | 0 | $0 |
| Florida | 7.5 | $375 |
| Georgia | 8 | $400 |
| Idaho | 8.5 | $425 |
| Illinois | 10 | $500 |
| Indiana | 7 | $350 |
| Iowa | 7 | $350 |
| Kansas | 9.8 | $490 |
| Louisiana | 11 | $550 |
| Maine | 5 | $250 |
| Massachusetts | 6.25 | $313 |
| Minnesota | 7.88 | $394 |
| Mississippi | 7.25 | $363 |
| Missouri | 10.49 | $525 |
| Nebraska | 7 | $350 |
| Nevada | 8.1 | $405 |
| New Hampshire | 0 | $0 |
| New Jersey | 7 | $350 |
| New Mexico | 8.69 | $435 |
| New York | 8.88 | $444 |
| North Carolina | 8.25 | $413 |
| North Dakota | 7.5 | $375 |
| Ohio | 7.75 | $388 |
| Oklahoma | 11 | $550 |
| Oregon | 0 | $0 |
| Pennsylvania | 8 | $400 |
| Rhode Island | 7 | $350 |
| South Carolina | 9 | $450 |
| South Dakota | 6 | $300 |
| Tennessee | 9.75 | $488 |
| Texas | 8.25 | $413 |
| Utah | 8.35 | $418 |
| Vermont | 7 | $350 |
| Washington | 9.5 | $475 |
| West Virginia | 6 | $300 |
| Wisconsin | 5.6 | $280 |
| Wyoming | 6 | $300 |
The only states that DO NOT currently give a tax credit as of January 2011 are:
California
District of Columbia
Hawaii
Kentucky
Maryland
Michigan
Montana
Virginia
If you live in one of these states, you have more incentive to sell your car to a private party.
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