States That Allow Trade-in Tax Credit
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 |
| Maryland | 5.75 | $288 |
| 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 | 6.25 | $312 |
| 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 February 2019 are:
California
District of Columbia
Hawaii
Kentucky
Michigan
Montana
Virginia
If you live in one of these states, you have more incentive to sell your car to a private party.
3 Steps Every Car Buyer Needs to Take to Save Maximum Money
The key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:Step 1 Get Prices From My Trusted Network
Select the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).Step 2 Get Prices From TrueCar / CarsDirect
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Follow this up with my checklist to make sure you squeeze out every last bit of savings.- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid
About The Author
Gregg Fidan is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate
the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.
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