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TAXABILITY OF NET COST REDUCTIONS

Cash back rebates are taxable

Most states will charge sales tax on your cash incentive rebates.

Trade-in value is taxable

In a handfull of states (looking at you CA, HI, KY, MD, MI, MT and VA) there is no sales tax reduction when you trade in a car. In other words, they tax the full purchase price of the car.

Check this LINK for more info on taxability of your trade-in.