Checked against each state's own law or tax agency. Last checked 2026-10-17.
In most states, when you trade your car in at the dealer where you buy the next one, you pay tax only on the difference between the two. That tax break is part of what a trade-in is worth, and you don't get it by selling the car yourself (in almost every state). Here's the rule, and what it comes to, in every state we've checked.
The math: tax saved = trade-in value × state tax rate. Michigan caps the trade-in value it credits, Ohio gives the credit only on new cars, and some states give no credit at all.
State rate only, 2026. Local tax can add more where noted below. Tap a state for its rule and sources.
| State | Rate | $10k trade-in | $20k trade-in |
|---|---|---|---|
| California | 7.25% | No credit | No credit |
| Florida | 6% | $600 | $1,200 |
| Georgia | 7% | $700 | $1,400 |
| Illinois | 6.25% | $625 | $1,250 |
| Indiana | 7% | $700 | $1,400 |
| Iowa | 5% | $500 | $1,000 |
| Kentucky | 6% | $600 | $1,200 |
| Maryland | 6.5% | $650 | $1,300 |
| Massachusetts | 6.25% | $625 | $1,250 |
| Michigan | 6% | $600 | $720 |
| Minnesota | 6.875% | $688 | $1,375 |
| Missouri | 4.225% | $422 | $845 |
| New Jersey | 6.625% | $662 | $1,325 |
| New York | 4% | $400 | $800 |
| North Carolina | 3% | $300 | $600 |
| Ohio | 5.75% | $575 (new car only) | $1,150 (new car only) |
| Pennsylvania | 6% | $600 | $1,200 |
| Rhode Island | 7% | $700 | $1,400 |
| Tennessee | 7% | $700 | $1,400 |
| Texas | 6.25% | $625 | $1,250 |
| Virginia | 4.15% | No credit | No credit |
| Washington | 6.5% | $650 | $1,300 |
| Wisconsin | 5% | $500 | $1,000 |
States with a credit: Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Texas, Washington and Wisconsin. No credit: California and Virginia. Other states: we haven't checked them yet, so we don't show a number for them.
California taxes the full price of the car you buy. The dealer can't subtract your trade-in, so trading in saves no tax.
Rate: 7.25% sales tax, on the full price. Trade-in saves: $0.
Sources: cdtfa.ca.gov (1), cdtfa.ca.gov (2)
Florida lets a registered dealer take the trade-in off the taxable price in the same transaction. County surtax applies only to the first $5,000 of the price.
Rate: 6% sales tax. Example: $10,000 trade-in ≈ $600; $20,000 trade-in ≈ $1,200.
County surtax can add a little more.
Sources: floridarevenue.com, law.cornell.edu
Georgia charges a one-time title tax (TAVT) instead of sales tax, figured on the price minus the trade-in. The trade-in's owner and VIN must be on the bill of sale.
Rate: 7% title tax (TAVT). Example: $10,000 trade-in ≈ $700; $20,000 trade-in ≈ $1,400.
The trade-in has to be listed on the bill of sale.
Sources: dor.georgia.gov, law.justia.com
Illinois taxes the price minus the trade-in. The $10,000 cap on the credit applied only in 2020 and 2021; it ended January 1, 2022.
Rate: 6.25% sales tax. Example: $10,000 trade-in ≈ $625; $20,000 trade-in ≈ $1,250.
Local tax can add a little more.
Sources: tax.illinois.gov, illinoispolicy.org
Selling or trading in a car in Illinois: plates, title deadline and fees · compare states
Indiana taxes the price minus the trade-in allowance when you trade a car in to the dealer you buy from.
Rate: 7% sales tax. Example: $10,000 trade-in ≈ $700; $20,000 trade-in ≈ $1,400.
Sources: in.gov
Selling or trading in a car in Indiana: plates, title deadline and fees · compare states
Iowa charges a one-time 5% fee for new registration (plus $10) instead of sales tax, figured on the price minus your trade-in when you trade it to the dealer. The trade-in has to be titled to the same person as the car you buy (spouses and close family count).
Rate: 5% fee for new registration. Example: $10,000 trade-in ≈ $500; $20,000 trade-in ≈ $1,000.
Sources: legis.iowa.gov, iowadot.gov
Kentucky's 6% motor vehicle usage tax is figured on the price minus your trade-in, for new and used cars. The trade-in has to be part of the same purchase (on the invoice and the notarized affidavit) and registered in your name; it can't be added after the sale.
Rate: 6% motor vehicle usage tax. Example: $10,000 trade-in ≈ $600; $20,000 trade-in ≈ $1,200.
Sources: revenue.ky.gov (1), apps.legislature.ky.gov, revenue.ky.gov (2)
Maryland charges its vehicle excise (titling) tax on the price minus the trade-in allowance. A leased car you turn in doesn't count as a trade-in. The rate went to 6.5% on July 1, 2025.
Rate: 6.5% vehicle excise tax. Example: $10,000 trade-in ≈ $650; $20,000 trade-in ≈ $1,300.
Sources: mva.maryland.gov
Massachusetts taxes the price minus your trade-in when you buy from a dealer, as long as sales tax was paid on the car you trade (or it was exempt). Buying from a private seller, a trade-in doesn't lower the tax.
Rate: 6.25% sales tax. Example: $10,000 trade-in ≈ $625; $20,000 trade-in ≈ $1,250.
It applies only if sales tax was paid on the car you trade in.
Sources: mass.gov (1), mass.gov (2)
Michigan taxes the price minus your trade-in, but only up to a cap on the trade-in's value. The cap was $5,000 in 2019 and rises $1,000 every January 1; it goes away in 2029.
Rate: 6% sales tax. 2026 cap: $12,000 of trade-in value. Example: $10,000 trade-in ≈ $600; $20,000 trade-in ≈ $720.
Sources: legislature.mi.gov, michigan.gov
Selling or trading in a car in Michigan: plates, title deadline and fees · compare states
Minnesota takes the trade-in off the purchase price when you trade a car in to a licensed dealer. The motor vehicle sales tax is 6.875% (it was 6.5% before July 1, 2023).
Rate: 6.875% motor vehicle sales tax. Example: $10,000 trade-in ≈ $688; $20,000 trade-in ≈ $1,375.
Sources: dps.mn.gov, revenue.state.mn.us, revisor.mn.gov
Missouri taxes only the part of the price above your trade-in allowance, as long as the allowance is on the bill of sale. Missouri also gives the same credit if you sell your old car yourself within 180 days before or after you buy; you show both bills of sale when you title the new one.
Rate: 4.225% sales tax. Example: $10,000 trade-in ≈ $422; $20,000 trade-in ≈ $845.
Local sales tax adds more, so the real savings are higher.
Sources: revisor.mo.gov, dor.mo.gov (1), dor.mo.gov (2)
New Jersey takes the trade-in allowance off the taxable price when the dealer takes the trade as part of the same purchase.
Rate: 6.625% sales tax. Example: $10,000 trade-in ≈ $662; $20,000 trade-in ≈ $1,325.
Sources: regulations.justia.com, nj.gov
New York taxes the price minus the trade-in the dealer accepts as part payment and plans to resell.
Rate: 4% sales tax. Example: $10,000 trade-in ≈ $400; $20,000 trade-in ≈ $800.
County and city sales tax add more on top, so the real savings are higher.
Sources: tax.ny.gov (1), tax.ny.gov (2)
North Carolina charges a 3% highway use tax instead of sales tax on a car, figured on the price minus the trade-in credit.
Rate: 3% highway use tax. Example: $10,000 trade-in ≈ $300; $20,000 trade-in ≈ $600.
Sources: library.ncleg.gov
Ohio subtracts the trade-in only when the car you buy is new. Buying a used car from a dealer, you pay tax on the full price even if you trade one in.
Rate: 5.75% sales tax. Example: $10,000 trade-in ≈ $575; $20,000 trade-in ≈ $1,150.
Local tax can add a little more.
Sources: tax.ohio.gov (1), tax.ohio.gov (2)
Selling or trading in a car in Ohio: plates, title deadline and fees · compare states
Pennsylvania taxes the price minus the trade-in when the trade happens at the same time as the purchase.
Rate: 6% sales tax. Example: $10,000 trade-in ≈ $600; $20,000 trade-in ≈ $1,200.
Allegheny County (+1%) and Philadelphia (+2%) add more.
Sources: law.cornell.edu, pa.gov
Rhode Island taxes the price minus your trade-in when you trade to the dealer you buy from, new or used. Only a passenger car, motorcycle or motor home counts as a trade-in; a vehicle registered as a truck, including most pickups, gets no credit.
Rate: 7% sales tax. Example: $10,000 trade-in ≈ $700; $20,000 trade-in ≈ $1,400.
A vehicle registered as a truck doesn't count as a trade-in there.
Sources: rules.sos.ri.gov, dmv.ri.gov
Tennessee subtracts the trade-in allowance from the price before figuring the 7% state sales tax. Local tax applies only to the first $1,600 of the price, so it barely changes the savings.
Rate: 7% sales tax. Example: $10,000 trade-in ≈ $700; $20,000 trade-in ≈ $1,400.
Local tax only covers the first $1,600 of the price.
Sources: tn.gov
Texas motor vehicle sales tax is charged on the price minus the trade-in when you trade a car to the dealer in the same deal. There's no local add-on for cars.
Rate: 6.25% sales tax. Example: $10,000 trade-in ≈ $625; $20,000 trade-in ≈ $1,250.
Sources: comptroller.texas.gov
Virginia's motor vehicle sales tax is on the full price; the DMV says it doesn't include any credit for trade-ins.
Rate: 4.15% motor vehicle sales tax, on the full price. Trade-in saves: $0.
Sources: dmv.virginia.gov
Washington takes a like-kind trade-in off the selling price before tax. The dealer takes ownership of your car and lists the trade-in on the sales agreement; a payoff on your loan doesn't lower the trade-in value.
Rate: 6.5% sales tax. Example: $10,000 trade-in ≈ $650; $20,000 trade-in ≈ $1,300.
The state's extra 0.5% motor vehicle sales tax and local tax add more, so the real savings are higher.
Sources: dor.wa.gov, lawfilesext.leg.wa.gov
Wisconsin taxes the price minus the trade-in when you trade a car in to the dealer as part of the purchase.
Rate: 5% sales tax. Example: $10,000 trade-in ≈ $500; $20,000 trade-in ≈ $1,000.
Local tax can add a little more.
Sources: law.cornell.edu, revenue.wi.gov
Selling or trading in a car in Wisconsin: plates, title deadline and fees · compare states
Do you pay sales tax on a trade-in?
No. You pay tax on the car you buy, not the one you trade in. In most states you pay it on the price minus your trade-in, so the trade-in lowers your tax bill. A few states, including California and Virginia, tax the full price anyway.
Does selling my car privately get the same tax break?
Not in most states. The credit applies when the dealer takes your car in trade as part of the purchase. Sell it yourself and you pay tax on the full price of the next car. The exception here is Missouri: it gives the same credit if you sell your old car within 180 days before or after buying, and you show both bills of sale when you title the new one.
Does California give a tax credit for a trade-in?
No. California taxes the full price of the car you buy. The dealer can't subtract your trade-in, so trading in saves no tax. The state sales tax rate is 7.25%, charged on the full price whether or not you trade in.
Does Florida give a tax credit for a trade-in?
Yes. Florida lets a registered dealer take the trade-in off the taxable price in the same transaction. County surtax applies only to the first $5,000 of the price. At the 6% state rate, a $10,000 trade-in saves about $600 and a $20,000 one about $1,200 before any local tax.
Does Georgia give a tax credit for a trade-in?
Yes. Georgia charges a one-time title tax (TAVT) instead of sales tax, figured on the price minus the trade-in. The trade-in's owner and VIN must be on the bill of sale. At the 7% state rate, a $10,000 trade-in saves about $700 and a $20,000 one about $1,400 before any local tax.
Does Illinois give a tax credit for a trade-in?
Yes. Illinois taxes the price minus the trade-in. The $10,000 cap on the credit applied only in 2020 and 2021; it ended January 1, 2022. At the 6.25% state rate, a $10,000 trade-in saves about $625 and a $20,000 one about $1,250 before any local tax.
Does Indiana give a tax credit for a trade-in?
Yes. Indiana taxes the price minus the trade-in allowance when you trade a car in to the dealer you buy from. At the 7% state rate, a $10,000 trade-in saves about $700 and a $20,000 one about $1,400.
Does Iowa give a tax credit for a trade-in?
Yes. Iowa charges a one-time 5% fee for new registration (plus $10) instead of sales tax, figured on the price minus your trade-in when you trade it to the dealer. The trade-in has to be titled to the same person as the car you buy (spouses and close family count). At the 5% state rate, a $10,000 trade-in saves about $500 and a $20,000 one about $1,000.
Does Kentucky give a tax credit for a trade-in?
Yes. Kentucky's 6% motor vehicle usage tax is figured on the price minus your trade-in, for new and used cars. The trade-in has to be part of the same purchase (on the invoice and the notarized affidavit) and registered in your name; it can't be added after the sale. At the 6% state rate, a $10,000 trade-in saves about $600 and a $20,000 one about $1,200.
Does Maryland give a tax credit for a trade-in?
Yes. Maryland charges its vehicle excise (titling) tax on the price minus the trade-in allowance. A leased car you turn in doesn't count as a trade-in. The rate went to 6.5% on July 1, 2025. At the 6.5% state rate, a $10,000 trade-in saves about $650 and a $20,000 one about $1,300.
Does Massachusetts give a tax credit for a trade-in?
Yes. Massachusetts taxes the price minus your trade-in when you buy from a dealer, as long as sales tax was paid on the car you trade (or it was exempt). Buying from a private seller, a trade-in doesn't lower the tax. At the 6.25% state rate, a $10,000 trade-in saves about $625 and a $20,000 one about $1,250 before any local tax.
Does Michigan give a tax credit for a trade-in?
Yes. Michigan taxes the price minus your trade-in, but only up to a cap on the trade-in's value. The cap was $5,000 in 2019 and rises $1,000 every January 1; it goes away in 2029. The 2026 cap is $12,000. At the 6% state rate, a $10,000 trade-in saves about $600 and a $20,000 one about $720.
Does Minnesota give a tax credit for a trade-in?
Yes. Minnesota takes the trade-in off the purchase price when you trade a car in to a licensed dealer. The motor vehicle sales tax is 6.875% (it was 6.5% before July 1, 2023). At the 6.875% state rate, a $10,000 trade-in saves about $688 and a $20,000 one about $1,375.
Does Missouri give a tax credit for a trade-in?
Yes. Missouri taxes only the part of the price above your trade-in allowance, as long as the allowance is on the bill of sale. Missouri also gives the same credit if you sell your old car yourself within 180 days before or after you buy; you show both bills of sale when you title the new one. At the 4.225% state rate, a $10,000 trade-in saves about $422 and a $20,000 one about $845 before any local tax.
Does New Jersey give a tax credit for a trade-in?
Yes. New Jersey takes the trade-in allowance off the taxable price when the dealer takes the trade as part of the same purchase. At the 6.625% state rate, a $10,000 trade-in saves about $662 and a $20,000 one about $1,325.
Does New York give a tax credit for a trade-in?
Yes. New York taxes the price minus the trade-in the dealer accepts as part payment and plans to resell. At the 4% state rate, a $10,000 trade-in saves about $400 and a $20,000 one about $800 before any local tax.
Does North Carolina give a tax credit for a trade-in?
Yes. North Carolina charges a 3% highway use tax instead of sales tax on a car, figured on the price minus the trade-in credit. At the 3% state rate, a $10,000 trade-in saves about $300 and a $20,000 one about $600.
Does Ohio give a tax credit for a trade-in?
Yes, when the car you buy is new. Ohio subtracts the trade-in only when the car you buy is new. Buying a used car from a dealer, you pay tax on the full price even if you trade one in. At the 5.75% state rate, a $10,000 trade-in saves about $575 and a $20,000 one about $1,150 before any local tax.
Does Pennsylvania give a tax credit for a trade-in?
Yes. Pennsylvania taxes the price minus the trade-in when the trade happens at the same time as the purchase. At the 6% state rate, a $10,000 trade-in saves about $600 and a $20,000 one about $1,200 before any local tax.
Does Rhode Island give a tax credit for a trade-in?
Yes. Rhode Island taxes the price minus your trade-in when you trade to the dealer you buy from, new or used. Only a passenger car, motorcycle or motor home counts as a trade-in; a vehicle registered as a truck, including most pickups, gets no credit. At the 7% state rate, a $10,000 trade-in saves about $700 and a $20,000 one about $1,400 before any local tax.
Does Tennessee give a tax credit for a trade-in?
Yes. Tennessee subtracts the trade-in allowance from the price before figuring the 7% state sales tax. Local tax applies only to the first $1,600 of the price, so it barely changes the savings. At the 7% state rate, a $10,000 trade-in saves about $700 and a $20,000 one about $1,400 before any local tax.
Does Texas give a tax credit for a trade-in?
Yes. Texas motor vehicle sales tax is charged on the price minus the trade-in when you trade a car to the dealer in the same deal. There's no local add-on for cars. At the 6.25% state rate, a $10,000 trade-in saves about $625 and a $20,000 one about $1,250.
Does Virginia give a tax credit for a trade-in?
No. Virginia's motor vehicle sales tax is on the full price; the DMV says it doesn't include any credit for trade-ins. The state motor vehicle sales tax rate is 4.15%, charged on the full price whether or not you trade in.
Does Washington give a tax credit for a trade-in?
Yes. Washington takes a like-kind trade-in off the selling price before tax. The dealer takes ownership of your car and lists the trade-in on the sales agreement; a payoff on your loan doesn't lower the trade-in value. At the 6.5% state rate, a $10,000 trade-in saves about $650 and a $20,000 one about $1,300 before any local tax.
Does Wisconsin give a tax credit for a trade-in?
Yes. Wisconsin taxes the price minus the trade-in when you trade a car in to the dealer as part of the purchase. At the 5% state rate, a $10,000 trade-in saves about $500 and a $20,000 one about $1,000 before any local tax.
We use the state rate only, so the savings shown is usually a floor. Tax rules change; check with the dealer or your state before you rely on a number. See how we estimate your trade-in value for the rest of the math.
How we calculate it · Trade-in tax by state · What dealers make · Trade in or sell? · What dealers check · Owe more than it's worth? · When to sell · Selling a car by state · Stop calls & texts