Jill Merriam Key Hyundai Blog

Proposed Connecticut Auto Tax on Trade-Ins

March 9, 2011
CT car tax

Life's two definites . . .

Governor Malloy is proposing sweeping tax increases to reduce our state budget deficit. To help close budget gap, Malloy is advocating shared sacrifice and many businesses and individuals and families will be affected.

It’s what members of society do. Make sacrifices.

The auto trade tax is all over the papers, Hartford Courant and tv and twitter. Maybe you heard about it, maybe not.

I’m not here to talk politics.

I’m not here to agree or disagree, choose sides or tell you who to vote for.

I sell cars.

And sell lots of cars to hard-working folks throughout Connecticut, so this is what the proposed auto tax means for you when car shopping at Key Hyundai (which I 110% encourage!):

The proposal on the table is to eliminate the sales tax trade in allowances for cars, and here’s

The Skinny on the Connecticut Car Trade-In Tax

When you trade in your current car, in whatever condition, Key Hyundai credits the value of your trade into the purchase price of your new car.  That means that you get a tax credit on your new car for the value of your trade in.

“How much will you give me for this?” is often how it’s presented to our sales guys.

We’re running a special which means, come hell or high water or 18” of snow or an ice storm to shut down major interstates, and Connecticut, you know we’ve had them all, we’re paying off your trade.

No Matter What.

18k, subtract trade in, pay your tax.

So get that car here, and your trade is worth $4000 deducted from the purchase price of, say, this $18,000 Elantra.

Do the math:

18,000

– 4000

= 14,000

Your new car will cost $14,000 plus registration and documentation.

Plus 6% sales tax: $840.

Done.

Except when the new tax trade-in allowance is removed.

Then your new car will still cost, $14,000 but you will be taxed on $18,000.

6% taxes: $1,080

Difference: $240.

That’s a lot of gas. Or really, not-so-much at $4+/gallon.

*sigh*

By eliminating the tax exemption for trade ins, means you must come up with more cash when you go to the bank. How much more depends on the price of the car you buy.

Bottom line: consumers will pay more in car loans.

Why?

Because now when you deduct your trade-in value for your car, you’re taxed on that difference.

But wait – there’s more. This affects a few less of my customers, but now that Key Hyundai sells the fancy-schmancy No-it’s-not-a-Benz, it’s an Equus, you too will now be hit.

There is an additional automobile tax, a 3% tax on luxury vehicles, translated: luxury vehicles are cars over $50,000.

Hyundai Equus at Key Hyundai Milford

The luxury vehicle tax may be worth it for this ride.

That shouldn’t effect Hyundai, except the holy bat-#*÷! Hyundai — what about that Equus?! But once you see • drive • smell • touch this gleaming machine, you may not care how much tax is slapped on the bill. Yeah, that nice.

But not all cars over $50k are luxury expenditures like the Equus. Some are work vehicles: heavy equip, SUVs, snow plows, trucks subject to the same luxury tax, despite the lack of said luxury. Pay, pay, pay. It is going to be tough out there people. Very tough.

Governor Malloy is trying to make ends meet. I get that. We all do.

I sell cars. I pay taxes, just like you.

And I like what I do.

My car dealer colleagues are arguing and fighting against future job loss in our industry. We compete against each other, but unite to save an industry already sucker punched by a dire economy.

The summary?

Buy a car now if you are concerned about taxes going up.

As the saying goes, taxes are one of the only certainties in life and, Connecticut? They aren’t going down.

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