Do you have to pay tax on incentives? - Camaro5 Chevy Camaro Forum / Camaro ZL1, SS and V6 Forums

zogster · 07-31-2012, 06:15 PM

My friend is looking at a Silverado (yes I know this is a Camaro forum, but it could apply to a Camaro too).

The dealer have him a pricing breakdown. On it they listed the MSRP, selling price, etc. One of the lines was tax on the incentives, which came out for $348. They explained to him that because it is something that you don't have to pay for and you get the price off the of the vehicle, you have to pay tax on the incentives.

Is this true? I guess the real question here is whether the tax on a vehicle is applied before or after the incentives are applied. Technically if you have to pay tax on the incentives, and you apply the incentives to the vehicle price before you put tax on the vehicle price, then it comes out as the same, but I guess I thought that the incentives would be applied to the price before incentives.

Can anyone tell me how this should work exactly?

TIA!

Wabbit · 07-31-2012, 06:23 PM

Maybe IL has a state income tax and it's considered miscellaneous income?

Didn't have to in WA last time I had an incentives in a deal. Then again, I better be quiet, they might add that tax here, too.

The other thing is that they may consider the incentive as money down, do you are paying a sales tax on the difference.

clg_98ta · 07-31-2012, 07:26 PM

I only paid tax on the after incentive price on my '10, and would assume its the same way now (in Texas). Not sure if it works the same way on a rebate, though...

JimE · 07-31-2012, 08:28 PM

In IL I want to say you pay taxes on the total before any incentives are taken off. But I'm not 100% certain. In any case, it's not something the dealer would/could be doing to pocket extra money. If it's noted on the receipt as taxes, they are paying it somewhere. And as IL is broke anyway, I could see them taxing it for extra income.

jmaynard · 07-31-2012, 08:43 PM

Quote:

Originally Posted by zogster

My friend is looking at a Silverado (yes I know this is a Camaro forum, but it could apply to a Camaro too).

The dealer have him a pricing breakdown. On it they listed the MSRP, selling price, etc. One of the lines was tax on the incentives, which came out for $348. They explained to him that because it is something that you don't have to pay for and you get the price off the of the vehicle, you have to pay tax on the incentives.

Is this true? I guess the real question here is whether the tax on a vehicle is applied before or after the incentives are applied. Technically if you have to pay tax on the incentives, and you apply the incentives to the vehicle price before you put tax on the vehicle price, then it comes out as the same, but I guess I thought that the incentives would be applied to the price before incentives.

Can anyone tell me how this should work exactly?

TIA!

Taxes are run after incentives. These are no different than cash down. In fact, an incentive is cash from the someone, usually manufacturer. They come off the sales price before taxes, licenses and fees.

RUN to another dealership, these guys are crooks.

EnjoyLife · 07-31-2012, 09:05 PM

Quote:

Originally Posted by jmaynard

Taxes are run after incentives. These are no different than cash down. In fact, an incentive is cash from the someone, usually manufacturer. They come off the sales price before taxes, licenses and fees.

RUN to another dealership, these guys are crooks.

If they are no different than cash down, that would mean I would pay no taxes if I bought the car outright.

AnnaBear@SpartaChevy · 08-01-2012, 09:04 AM

Here in Michigan you have to buy something before you can get a rebate. Rebates and incentives are always taxed here.

DD7 · 08-02-2012, 12:21 PM

Ditto here in NY. Sales tax is always applied before rebates are deducted, but it varies from state to state. Here is a link to an great article on the topic. Scroll down towards the bottom and it will tell you the info. for each state.

http://www.edmunds.com/car-buying/wh...d-you-pay.html

MARINE1991 · 08-02-2012, 01:53 PM

Quote:

Originally Posted by AnnaBear@SpartaChevy

Here in Michigan you have to buy something before you can get a rebate. Rebates and incentives are always taxed here.

ca too...

Supermaro585HP · 08-02-2012, 02:04 PM

In PA. you pay taxes on the total after all rebates and incentives are taken off.

STuRTzz · 08-03-2012, 12:07 AM

I had a $1000 private offer and it was considered as down payment so it was still taxed. California btw.

07-31-2012, 06:15 PM	#1
zogster Drives: 2014 RRM ZL1 M6 Join Date: Jul 2011 Location: IL Posts: 659	Do you have to pay tax on incentives? My friend is looking at a Silverado (yes I know this is a Camaro forum, but it could apply to a Camaro too). The dealer have him a pricing breakdown. On it they listed the MSRP, selling price, etc. One of the lines was tax on the incentives, which came out for $348. They explained to him that because it is something that you don't have to pay for and you get the price off the of the vehicle, you have to pay tax on the incentives. Is this true? I guess the real question here is whether the tax on a vehicle is applied before or after the incentives are applied. Technically if you have to pay tax on the incentives, and you apply the incentives to the vehicle price before you put tax on the vehicle price, then it comes out as the same, but I guess I thought that the incentives would be applied to the price before incentives. Can anyone tell me how this should work exactly? TIA!

07-31-2012, 06:23 PM	#2
Wabbit Drives: 2013 2LT/RS SIM/Grey lnt/Sun/Nav Join Date: Jul 2012 Location: In my car as much as I can Posts: 783 View My Garage	Maybe IL has a state income tax and it's considered miscellaneous income? Didn't have to in WA last time I had an incentives in a deal. Then again, I better be quiet, they might add that tax here, too. The other thing is that they may consider the incentive as money down, do you are paying a sales tax on the difference. __________________ Rally Stripes - Check Hockey Stripes - Check Gills - Check Ambient Lighting - Saving my $$$ now

07-31-2012, 07:26 PM	#3
clg_98ta Drives: 2010 Camaro 2SS Join Date: Jan 2010 Location: Austin, TX Posts: 2,698 View My Garage	I only paid tax on the after incentive price on my '10, and would assume its the same way now (in Texas). Not sure if it works the same way on a rebate, though... __________________ Black 2SS ordered 1/4/2010, received 2/19/2010

07-31-2012, 08:28 PM	#4
JimE Drives: 2013 2SS/RS/1LE Join Date: Apr 2010 Location: St Louis, MO Posts: 3,087	In IL I want to say you pay taxes on the total before any incentives are taken off. But I'm not 100% certain. In any case, it's not something the dealer would/could be doing to pocket extra money. If it's noted on the receipt as taxes, they are paying it somewhere. And as IL is broke anyway, I could see them taxing it for extra income.

08-01-2012, 09:04 AM	#7
AnnaBear@SpartaChevy Drives: 2011 Camaro 1SS Manual Synergy Grn Join Date: Apr 2009 Location: Sparta Chevrolet, Sparta, MI Posts: 2,108	Here in Michigan you have to buy something before you can get a rebate. Rebates and incentives are always taxed here.

08-02-2012, 12:21 PM	#8
DD7 Drives: It goes. Join Date: May 2012 Location: Long Island Posts: 6	Ditto here in NY. Sales tax is always applied before rebates are deducted, but it varies from state to state. Here is a link to an great article on the topic. Scroll down towards the bottom and it will tell you the info. for each state. http://www.edmunds.com/car-buying/wh...d-you-pay.html

08-02-2012, 02:04 PM	#10
Supermaro585HP Account Suspended Drives: 2011 Camaro SS RS Join Date: Aug 2011 Location: Pittsburgh, PA Posts: 1,186 View My Garage	In PA. you pay taxes on the total after all rebates and incentives are taken off.

08-03-2012, 12:07 AM	#11
STuRTzz Drives: '12 Summit White 2ls W/Black Stripe Join Date: Apr 2012 Location: Orange County, CA Posts: 670	I had a $1000 private offer and it was considered as down payment so it was still taxed. California btw.