JTH150

Question to board:

When buying a new car that has incentives, what number does the incentives get subtracted from? Before tax or after tax? Just started thinking about this now that a month has past since I bought. On my purchase, we agreed to dealer invoice minus 500. He then applied tax to that number and then subtracted the incentives from the after tax price. Was that right?

I ask because I see a lot of people post on here that they paid invoice minus x minus incentives to arrive at their price paid. What's correct?

FordTech413

I'm not sure exactly what the answer is but you must take into account that many people on the forum are from all around the world, dealerships operate differently in different countries.

psanzone

I wondered the same thing. The dealer sold the truck to me for 500 under their invoice. I paid tax on that amount. After that, the dealer then deducted the Ford year-end incentive of 3550. This amounts to an additional $297 in tax here in NY. I went on the NY tax division website to check this out, and found out that if the incentive from Ford is directed at me, it is taxable under NY law. If the incentive is directed at the dealer, then it is not taxed to me. I even printed out the page instructions because I couldn't believe that the tax crazy state of NY would tax me on money that I did not pay! No wonder so many NY retirees leave that state.

JTH150

Thanks for the replies. It doesn't amount to that much money in the end, I was just curious. You would think the incentives would deduct from the truck price to arrive at final price before tax. But it sounds like it doesn't work that way. Either way, I'm happy with my truck and what I paid for it!

coachDOC

That's how it works in many states.

You have a transaction with the dealer, and you pay sales tax on that transaction. The rebates come from the manufacturer and are given after the purchase is completed. There were, in the past, some manufacturer-to-dealer incentives that would have been pre-tax.

So it's not a shady deal or anything. Actually, just be glad the rebates aren't taxable as income!