I'm planning to buy a jeep, do i have to pay taxes on the incentives and dealer rebates?

Question

The dealer is telling in the invoice the incentives and rebates go after the taxes have been calculated on the car. Is that accurate?

Answer 1

yes, that's correct.  example:

26000 selling price

+2242.50 8.625 tax

28242.50  subtotal

-2000

26242.50 total

Taxes are charged on rebates, just as if you  went to best buy and bought a tv for 1000 with a 100 mail in rebate.  you pay tax on the 1000, and then get the rebate of 100.  

This is the proper way to do it according to tax law.

Answer 2

Normally tax is paid on the bottom line, however if the rebates and incentives are paid back to you, as in, after the sale is complete, then they are also taxable.

Answer 3

That is what the dealer will tell you. However, if you are wise, ALWAYS bargin with them. In the automotive world many things are negotiable. If they say the incentives and rebate go after the taxes, negotiate the price down.

If not, go to another dealership to get the service and price you want. If they say the incentives and rebate go after the taxes, then tell them you want them to sell you the car for $1000 less. The power to walk away is yours, use it wisely.

Answer 4

Don't buy Jeep because you will have lots of problems. I do like the older Jeeps, but Chrysler is operationally bankrupt.

Answer 5

If your state taxes vehicle purchases, then all rebates and incentives ARE taxed. For instance, if the car has an MSRP of $45,690 and they reduce the price <not including rebates> to $43,000, you will not pay taxes on the $2,690. However if this car also has $3,000 in rebates, your buyers order will show taxes on the $43,000 then they take out the rebates.

Rebates are considered cash down, and all money must be taxes except for actual price reductions from the profit. Good luck and I hope this helps.

Answer 6

You pay tax on the actual price paid for the vehicle. If it is $15,000 minus a $1000 rebate, you would pay tax on $14,000.