[Dana]

Your story makes sense -- you probably did the right thing, especially as moving is such a daunting task. Except, depending on the model year of your Jetta, the ID.4 might be a somewhat safer car. For one thing, weight is on its side, plus it has autonomous emergency braking with pedestrian braking which your Jetta may or may not have. On the other hand the Jetta is smaller and a passenger car so it may be more maneuverable. Yeah, I never do dealer trades anymore. CarMax and Carvana offer better prices. My Pro doesn't have lumbar or massaging seat back, but I find the seats to be comfortable even though I have back/neck problems and osteoporosis. And I typically drive 130 miles per day. But each human's back is different.... Right, I don't think lane assist is ready for prime time. First thing I do on start up is to turn it off. It's an annoying nanny to say the least. Right again, I found the steering to be a little different at first, but I've gotten used to it and probably like it at this point. I've driven my Pro 11K with no issues - fingers crossed on that.... Count it as the best car I've ever owned.

 

[Dana]

Because you don't have to pay tax on the entire price of the new car but only on the difference between the price of the trade-in and the price of the new car - if you trade your old car as part of the same transaction. Of course, if the difference in the price of the used car between Carvana and the VW dealer is $4,000, then you are better off selling your old car to Carvana and paying sales tax for the entire price of the ID.4.

Wait a minute, does the sales tax thing depend on the state you live in? Like I live in Ca and the sales tax is added in at the top of the contract, long before the downpayment trade-in is subtracted off at the bottom. Also, the sales tax itself is tax deductible at income tax time. So if you pay more sales tax it's not all to the bad. I went to an H&R Block once and they were only going to give me the table amount sales tax deduction. Then I said that I usually have a CPA do my returns, and the sales tax on large purchases, like cars, is also tax deductible (in addition to table amount). She double checked and was surprised to see that I was right. (Maybe tax laws have changed since then - not sure.)

 

[Dana]

I don’t know about California, you guys are weird anyway 😄 but in all the states that I’ve lived the sales tax is not deductible. That’s why it’s called double-taxation. You pay your income tax and whatever is left over is yours to spend, but you pay more tax on everything you buy. The only sales tax that is deductible from the adjusted gross income is the tax on the items that are deductible. Like if I buy a computer for my business and expense it out as a business expense, then the entire amount (including sales tax) can be deducted from my income to lower my adjusted gross income that I would pay income tax on.

In my state, I have to pay 7% sales tax on a vehicle purchase, and none of that is tax deductible unless I buy the vehicle for my business, but I will have to amortize it over the course of several years because you can’t deduct the entire value of a car in one year. I think the limit for that is an item that costs less than $2,500, which can be deducted in its entirety.

But for private car purchases, there is no tax deduction for the sales tax paid on the car purchase. Of course, the ID.4 has a $7,500 federal income tax credit, so if you owe more than $7,500 in federal tax, you can reduce the federal income tax by $7,500, which is more than the 7% sales tax on the $50,000 price of the AWD ID.4.

No, I must be weirder than weird because I lived in 5 other states and one other country before I settled in Ca.
It turns out 6 other states besides Ca do not reduce sales tax for trade-ins, and nobody ever cracks jokes about those states - they don't dare with some of them, ha, ha. Anyway, who can say anything bad about Hawaii for example?
This is from Zacks (the first part supports your case and the second part mine):
"Trade-in Value Increase
Another way to view the sales tax reduction from trading a car -- and a favorite view of car dealers -- is that the reduced sales tax can be equated to a higher value for your trade-in. If the dealer gives you $10,000 for your trade and trading the car reduces your sales tax bill by $800, you are in effect receiving $10,800 for the car you are trading. If you sold the car on your own, you would not receive the sales tax savings, so would have to sell the car for more than $10,800 to come out ahead of going the trade-in route.
States without Tax Benefit
The state of Oregon has no sales tax, so if you live in that state and buy a car, the tax calculation is easy -- zero. In seven other states, there is no credit or sales tax reduction when you trade in a car. Those states are California, Hawaii, Kentucky, Maryland, Michigan, Montana and Virginia. If you live in one of these states you calculate sales tax by multiplying the full new car purchase price times the local sales tax rate".

Hmmm, I'll have to ponder the rest of what you said as I don't do my own taxes, so I may have used a wrong word or two in previous post. All I know is that when I itemize deductions I pay less taxes than if I were to take the standard deduction, even with recent tax law changes. And sales tax and property tax are part of my itemized deductions. Maybe I should move to Oregon where things are simpler.... Nah, we're getting into cold season, and I already bought my Pro anyway. Oregon is really, really nice though....

 

[Dana]

I think for California, you guys are best to use the DMV site apparently. LOL

Vehicle Registration & Licensing Fee Calculators - California DMV

Thanks on that, I just tried the above calculator and it computed the same fees I was charged for sales tax and total registration when I bought my ID.4. The dealers here know what they can get away with, so no worries on registration fees and sales tax calculations in Ca nowadays.
But when I bought a new '81 Saporro in Ca., at a time not long after they started calculating fees with a computer program, my TI calculator showed they were overcharging me about $60+ for sales tax. They expressed surprise, apologized, and said that they weren't aware of that and that it was the first time anyone had noticed. I surmised they couldn't be that stupid and maybe it was deliberate. Oh, you mentioned Florida above. I lived there for maybe 2 years and attended Sunrise JHS and Pompano Beach HS. (Way back then they were not good schools, but the area was truly great).

 

[Dana]

Cool. South Carolina, where I was prior to Florida, has the weirdest tax law on car purchases. Car sales tax on new cars is capped at like $500 no matter the cost of the car. You do pay annual property tax, which can be pretty steep.

That's a strange law alright - it favors the rich and burdens the poor. Whoever thinks this stuff up? It's fascinating that states have come up with so many different methods to tax car sales. 50 states and DC and some territories, and each one marches to its own drumbeat....