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If you use the Trade-Ins tool in the Register to accept traded inventory on purchases, your state might offer tax credits on that expense, meaning the item being traded for would have its tax reduced based on the item being traded. Please read further to find out more.

 

Three States Do Not Allow Trade-In Tax Credit

The situation is getting better: just four years ago, there were 7 states on this list. The following 3 states, as of 6/2024, do not offer tax credit on trades*:

• California
• Hawaii
• Virginia

*Source: Bankrate.com article on Does a Trade-In Reduce Sales Tax?

 

In the following 3 states, it is not an issue, as they do not charge sales tax:

• Montana
• New Hampshire
• Oregon

 

In the following states, limited Tax Credits are offered:

• Michigan only allows tax credit on the first $10,000 in a large purchase, as with an automobile.
• Ohio only offers the tax credit for new car sales: for used car sales, you must pay the full tax value.

So if your state is not listed above, you are able to get the taxable amount in a transaction reduced by the amount of the trade-in item. The system has been coded already for states that allow this tax reduction, so it will already be there for you and functioning if your state offers the tax credit.

If you have questions please give us a call at 385-404-6200.