Tax Advantages of Trading In a Car in Arizona

If you live in Lake Havasu City or Bullhead City, buying a new vehicle is one of the most important purchases you’ll make in your lifetime. On a small purchase, generally, the sales tax isn’t much of a factor. However, when that purchase reaches the $20,000 point and beyond, additional expenses like sales tax can make up a sizeable portion of the total at the end of the day.

If you live in Arizona, there could be significant benefits of trading in a car—assuming you take the right steps during the trading process. Using different strategies can help you uncover the tax benefits of trading in a car in AZ. In this article, we’ll show you different steps for saving.

How Does Sales Tax Work on a New Car Purchase?

You’ve almost certainly noticed the line at the bottom of your receipt after making a retail purchase that’s labeled “tax.” We expect to pay this small percentage on most retail purchases, and a vehicle is no different. In the state of Arizona, the tax on a new car purchase is 5.6%. This is factored in with the cost of the vehicle at the time of the transaction.

However, there are tax benefits of trading in a car if you’re in Arizona. This could save you a significant amount of money the next time you plan on buying a new car. So, what are the tax benefits of trading in a car in AZ?

How Does Trading in a Car Impact the Sales Tax Advantage in AZ?

The tax benefits of trading in a car in AZ can make a big difference when it comes to the bottom line of your purchase. You’re responsible for a lower amount of tax liability if you have a vehicle to offer for trade. Essentially, the primary benefit of trading in a car near Kingman, is that you’re only responsible for paying tax on the difference between the price of the new vehicle and the value of your trade-in. Here’s an example:

Let’s say you purchase a new vehicle for $40,000 but you have a trade-in that’s valued at $20,000. In this situation, you’re only responsible for paying taxes on $20,000 instead of $40,000. Bottom line? If this were a real-life scenario, it would net you $1,120 in savings. This equates to two—maybe three—car payments, several car insurance payments, two years’ worth of oil changes, or any other expense associated with your vehicle.

Discover the Tax Benefits of Trading in a Car in AZ at Anderson Auto Group

If you’re in the market for a new vehicle, Anderson Auto Group welcomes drivers from Lake Havasu City and all surrounding areas to shop for a new vehicle or obtain a free estimate on your trade-in. We have an extensive collection of different makes and models for you to choose from. Browse our inventory or research specific models in our inventory and come take a test drive. For more information about our vehicles or the benefits of trading in a car, contact us today.