No, I must be weirder than weird because I lived in 5 other states and one other country before I settled in Ca.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.
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....