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I got the $3,000 incentive when I bought my car. One thing bothered me. They charged me tax on the incentive. I didn't pay the extra $3K, why do I have to pay tax on it? It just didn't seem to make sense. I calculated how much the tax should have been and they were charging me about $260 more than what I expected. That's when I found out that I was responsible for the tax on the incentive.

Does this sound right?
 

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That is 8.67%, so if that is how much your sales taxes are in your area then that sounds exactly right.
 

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I got the $3,000 incentive when I bought my car. One thing bothered me. They charged me tax on the incentive. I didn't pay the extra $3K, why do I have to pay tax on it? It just didn't seem to make sense. I calculated how much the tax should have been and they were charging me about $260 more than what I expected. That's when I found out that I was responsible for the tax on the incentive.

Does this sound right?
Yup, the tax is calculated after the trade-in but before the incentives are subtracted. The finance guy should have explained it to you. How are you figuring $260? Does your state have close to 9% sales tax? Wow.
 

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Yup, the tax is calculated after the trade-in but before the incentives are subtracted. The finance guy should have explained it to you. How are you figuring $260? Does your state have close to 9% sales tax? Wow.
Yes, the Sales Tax Rate in NYC is 8.875%. The amount I paid was actually $266.25 for tax on the Incentive.
 

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Look at the bright side. When the domestic automakers first started using rebates in the late 70s/early 80s people used to get charged Federal Income Tax on the rebate even though they never saw the money. The government required the automakers to send a 1099 to each purchaser that received a rebate. After some griping things were changed.

Bill
 

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If you check, even when you go to places like Costco and you use their coupon, they charge tax on the original before coupon price. States are realizing they are loosing tax revenue.
 

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i took a tax class and think of it like this, if you have any addition to your wealth, the government wants some of it, if you lose money, oh well too bad they dont give you any. thats why you were taxed on the incentive because it is an addition to your wealth so to speak
 

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Here in some parts of NC, some localities are wanting to charge sales tax on gift cards. They see it as potential revenue they are loosing, ie: I buy a $100 gift card here and send it to a relative in Fla. NC gets no sales tax from that.

Thankfully the state legislature has not given them authority to do that yet.

If they had that authority, they could potentially collect tax on that money twice. If the card is taxed at purchase, then used in NC, it would be taxed again.
 
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