Michigan is one of just six states to make car buyers pay sales tax on the full price of a new car without subtracting the value of the trade-in. But that may soon change.
It is part of a deal state lawmakers struck Tuesday with Gov. Rick Synder.
Here's how it would work. Right now when you trade in your car for a new one, you still pay taxes on the full purchase price of the new vehicle.
But under the new plan, when calculating sales tax, the state would subtract the value of the trade-in, but only up to $2,000.
"It seems unfair that you would pay full tax on a car, maybe keep it for maybe as little as six months, buy another car pay tax and not get a credit for the car you already paid tax on," said Steve Cook, of Cook Chevrolet.
Cook says the bill is a win-win for everyone.
"The consumer will benefit saving the money and car dealers will hopefully benefit as people see that as an opportunity to go out and buy more cars and make it more affordable for them to buy more cars," said Cook.
The legislation is expected to win final approval on Wednesday and would go into effect in December.
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