When a dealer accepts a vehicle for trade – in, that value may not be deducted from the amount on which sales and use tax is charged.
There is no adjustment if that value is more or less than fair market value.
When the dealer allows a discount, the tax is computed on the sales price less the discount. The sales contract must clearly show the sales price & discount amount, the taxable amount and the sales tax collected.
When the dealer accepts a trade – in and allows a discount in the same transaction it must be clearly shown on the sales contract. If not, the entire amount is taxed.