I am in the process of getting a chevrolet equinox EV but the sales tax is really confusing to me. Here is the breakdown:
MSRP: 44795
Term: 36/10
Residual: 73%
MF: 0.00122
My understanding is that my tax basis should be 44795 * 0.27 = 12094.65. Then Washington state has a sales tax exemption for cars under 45000 MSRP which means no tax at all.
Then today I am getting a quote from a dealer with 10500 rebates applied. I was told I need to pay tax on the rebate which amounts to 1102.5. They told me that I need to pay tax on both the car and the rebate; the car portion is 0 tax but the rebate is taxed full. I can’t help but feel this shouldn’t be correct? If I don’t apply the rebate at all my sales tax would be 0; but if I apply some rebates I need to pay tax?
So rebates can be taxed, that is indeed correct. Nearly all states tax rebates, with very narrow exceptions, NJ on EVs (for now), PA does not tax, so yes dealer probably isn’t scamming you.
If total sales price is $45k, or below, then no sales tax is due over the first $15k in payments. Note that accessories or any thing else that’s part of the car is included as part of the $45k limit. Warranties, etc. are not.
Looks like they’re probably doing it wrong. Your total payments + rebates are $22,594. The sales tax exemption only applies to the first $15k in payments. So you should be paying tax on $7594. So you should be looking at roughly $800 if you’re in King or Pierce Counties.
Are you not getting a dealer discount off MSRP? Have a look at some of the deals here to make sure you’re getting a good deal.
Lots of the dealers seem to be raising prices to capture the $9k state rebate (if you qualify for that). You may want to shop around (sending offers to dealers) and see if you can find one that’s not playing that game.
