With the legislative change that was passed at the beginning of this year, each January 1st the cap on the trade-in value now increases by $1,000 until it reaches $14,000, at which point the cap is removed and full sales tax on the difference is implemented. In 2019, a person can receive up to a $5,000 reduction in the taxable price of a vehicle, reducing the amount of sales tax due. Please remember that the Delivery Date determines the sales tax trade-in credit amount to apply (NOT purchase date).
The state also created a document with answers to frequently asked questions related to the sales tax trade-in credit, such as:
Q. Can a trade-in sales tax credit be applied to a lease vehicle transaction?
A. No, the trade-in credit laws do not provide for trade-in tax sales tax credit for leased vehicles
A link to the FAQ is available within the MADA website at www.michiganada.org
. (While the trade-in mentioned is still the current $4,000 amount, the questions and answers are valid.)