For example, a $1,000 cash rebate may be offered on a $10,000 car, meaning that the out of pocket cost to the buyer is $9,000. Many dealers offer cash incentives or manufacturer rebates on the sticker price of a vehicle in order to encourage sales. How are rebates and dealer incentives taxed? This means that you save the sales taxes you would otherwise have paid on the $5,000 value of your trade-in. In Louisiana, the taxable price of your new vehicle will be considered to be $5,000, as the value of your trade-in is not subject to sales tax. For example, you could trade-in your old car and receive a $5,000 credit against the price of a $10,000 new vehicle, making your out-of-pocket cost only $5,000. Many dealerships allow you to trade-in your old car in exchange for a credit applied to the price of a new vehicle.
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