Trade-in tax credit by state: where a trade-in lowers the sales tax
See which states reduce the taxable amount by the trade-in allowance and which do not, for every state and DC.
Last checked November 14, 2026
In most states the value of a trade-in reduces the amount a car sale is taxed on. A few states give no credit, or give it only in limited cases. Here is how the states compare.
States where the trade-in reduces the tax (48)
Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, Wyoming.
States where it does not (3)
California, Ohio, Virginia.
Full table
| State | Trade-in |
|---|---|
| Alabama | Reduces the tax |
| Alaska | Reduces the tax |
| Arizona | Reduces the tax |
| Arkansas | Reduces the tax |
| California | Does not reduce the tax |
| Colorado | Reduces the tax |
| Connecticut | Reduces the tax |
| Delaware | Reduces the tax |
| District of Columbia | Reduces the tax |
| Florida | Reduces the tax |
| Georgia | Reduces the tax |
| Hawaii | Reduces the tax |
| Idaho | Reduces the tax |
| Illinois | Reduces the tax |
| Indiana | Reduces the tax |
| Iowa | Reduces the tax |
| Kansas | Reduces the tax |
| Kentucky | Reduces the tax |
| Louisiana | Reduces the tax |
| Maine | Reduces the tax |
| Maryland | Reduces the tax |
| Massachusetts | Reduces the tax |
| Michigan | Reduces the tax |
| Minnesota | Reduces the tax |
| Mississippi | Reduces the tax |
| Missouri | Reduces the tax |
| Montana | Reduces the tax |
| Nebraska | Reduces the tax |
| Nevada | Reduces the tax |
| New Hampshire | Reduces the tax |
| New Jersey | Reduces the tax |
| New Mexico | Reduces the tax |
| New York | Reduces the tax |
| North Carolina | Reduces the tax |
| North Dakota | Reduces the tax |
| Ohio | Does not reduce the tax |
| Oklahoma | Reduces the tax |
| Oregon | Reduces the tax |
| Pennsylvania | Reduces the tax |
| Rhode Island | Reduces the tax |
| South Carolina | Reduces the tax |
| South Dakota | Reduces the tax |
| Tennessee | Reduces the tax |
| Texas | Reduces the tax |
| Utah | Reduces the tax |
| Vermont | Reduces the tax |
| Virginia | Does not reduce the tax |
| Washington | Reduces the tax |
| West Virginia | Reduces the tax |
| Wisconsin | Reduces the tax |
| Wyoming | Reduces the tax |
Exceptions to know
- Some states limit the credit to certain trades, such as like-kind vehicles, or cap it.
- Some states give the credit only on new vehicles.
- Rebates and other incentives are treated differently in different states. DMS Apex does not take rebates off automatically, so subtract them yourself where your state allows.
Rules change and have exceptions. This table summarizes the rules DMS Apex uses to work out a standard used-car sale and is not legal or tax advice. Confirm current requirements with your state agency or an accountant, and re-check every January.
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