Trade-In Sales Tax Credit by State
In 41 of the 51 jurisdictions on this site, a trade-in lowers the tax on a $35,000 new car. The table shows how much a $10,000 trade-in saves in each, computed with each state's own rules.
| State | Trade-in credit | Tax saved on $10,000 |
|---|---|---|
| Washington | Yes | $1,030.00 |
| Louisiana | Yes | $1,000.00 |
| Kansas | Yes | $900.00 |
| New York | Yes | $887.50 |
| Illinois | Yes | $875.00 |
| Arizona | Yes | $860.00 |
| Nevada | Yes | $837.50 |
| Missouri | Yes | $822.50 |
| Ohio | New cars only | $800.00 |
| Utah | Yes | $725.00 |
| Georgia | Yes, on dealer sales | $700.00 |
| Indiana | Yes | $700.00 |
| Nebraska | Yes | $700.00 |
| Rhode Island | Yes | $700.00 |
| Tennessee | Yes | $700.00 |
| Colorado | Yes | $690.00 |
| Minnesota | Yes | $687.50 |
| New Jersey | Yes | $662.50 |
| Arkansas | Yes | $650.00 |
| Maryland | Yes | $650.00 |
| Connecticut | Yes | $635.00 |
| Massachusetts | Yes | $625.00 |
| Texas | Yes | $625.00 |
| Florida | Yes | $600.00 |
| Idaho | Yes | $600.00 |
| Kentucky | Yes | $600.00 |
| Michigan | Yes, capped at $12,000 (2026) | $600.00 |
| Pennsylvania | Yes | $600.00 |
| Vermont | Yes, if sold within 3 months | $600.00 |
| West Virginia | Yes, if titled in WV | $600.00 |
| Maine | Yes | $550.00 |
| Wisconsin | Yes | $550.00 |
| Delaware | Yes | $525.00 |
| Iowa | Yes | $500.00 |
| Mississippi | Yes | $500.00 |
| North Dakota | Yes | $500.00 |
| Wyoming | Yes | $500.00 |
| Alabama | Yes | $400.00 |
| New Mexico | Yes | $400.00 |
| South Dakota | Yes | $400.00 |
| North Carolina | Yes | $300.00 |
| Alaska | No sales tax | $0.00 |
| California | No | $0.00 |
| District of Columbia | No (tax is on market value) | $0.00 |
| Hawaii | Not confirmed | $0.00 |
| Montana | No sales tax | $0.00 |
| New Hampshire | No sales tax | $0.00 |
| Oklahoma | Not confirmed | $0.00 |
| Oregon | No sales tax | $0.00 |
| South Carolina | Moot above $10,000 (fee capped at $500) | $0.00 |
| Virginia | No | $0.00 |
A $35,000 new gas car from a dealer with a $10,000 trade-in, at each calculator's default local rate.
The exceptions
California and Virginia tax the full price no matter what you trade. Michigan has been phasing in a credit with a cap that rises each year; for 2026 it's $12,000. Ohio credits the trade only on a new car. In South Carolina the question rarely matters, because the 5% fee is capped at $500 and reaches the cap at $10,000. DC taxes a car's market value, so the price you negotiate and your trade-in don't change it.
Even where the credit exists, the conditions vary: West Virginia requires the trade to be titled there, Vermont requires the trade to happen within three months and Tennessee requires the dealer to show the credit on the invoice. Use the trade-in tax savings calculator to see whether trading in beats selling yourself.
FAQ
Does a trade-in reduce sales tax?
In most states, yes: you pay tax only on the price minus the trade-in. California and Virginia tax the full price, Michigan caps the credit at $12,000 in 2026 and Ohio gives it only on new cars.
Do I get the trade-in credit on a private sale?
Usually not. Most states give the credit only when a dealer takes the trade. South Dakota and Iowa are among the exceptions that allow it between private parties.
What if I still owe money on my trade-in?
States we've checked base the credit on the trade-in allowance, not your equity, so a loan payoff doesn't shrink it.
Every figure comes from the same engine as our state calculators. See how we calculate.