Trade-In Sales Tax Savings Calculator
In 41 states you can get a tax credit in when you trade-in your car if you buy another at the same time. This can be a reason to trade-in at the dealership as long as you're not getting a lowball offer.
The trade-in calculator below will tell you your potential tax savings and help you decide whether you will make more money trading-in to a dealership or selling to a private party.
Also, learn more about the best time to trade-in your car.
Should You Trade-in or Sell Private Party?
Vehicle sales tax rates change occassionally and vary by county and jurisdiction so only use these calculations as a guide. The actual amount you owe may differ. In states that offer the tax credit, the dealer will typically reduce the amount of sales tax collected for you automatically.
And to get the full tax savings, your trade-in value must be less than the purchase price of your new car.
Trade-in Sales Tax Credit Calculation
The calculator above is based on the following formula:
trade-in value * tax rate = tax savings
Note: States that do not have a trade-in tax credit policy do not get any tax savings.
Which States Do Not Provide a Trade-in Tax Credit?
The following states and the District of Columbia do not have a trade-in sales tax credit policy:
Which States Do Not Have Sales Tax?
These states do not charge sales tax at all and therefore there is no sales tax credit:
If You Buy Out of State, Where Do You Pay Sales Tax?
When you buy a car in another state, the amount you pay in sales tax usually depends on where the car is registered, not where it was purchased.
Do You Get a Trade-in Sales Tax Credit on a Lease?
If you lease instead of purchase there is no tax advantage for trading in your car.
Is It Better to Sell Your Car or Trade It In?
Many states will credit the value of your trade-in when determining the purchase price for sales tax calculations. This can result in a significant discount off the total amount you’ll pay. These savings are not available if you sell your car to a third party. Use the calculator above to determine which is a better deal.
What About Your Car Warranty?
Prior to selling or trading in your car, consider canceling your extended warranty. Most third-party providers allow you to cancel for a full refund within 30 or 60 days of purchasing the policy if it’s unused. If you’ve had the policy for longer, then you can cancel for a pro-rated refund.
Note that most VSC plans are transferable, so you could leverage this to get more for the car you are selling. Read our extended warranty guide to learn more.