FAQs - Sales & Use Tax: Motor Vehicles & Watercraft

What is a "new" motor vehicle as it pertains to the trade-in allowance?

If you have any questions as to whether a motor vehicle is considered new or used, you should address the question to the Bureau of Motor Vehicles (BMV), Title Division. The sales and use tax law does not provide a definition of new or used motor vehicle so we have to defer to the BMV’s definition and determination. If BMV establishes the fact that a “new” vehicle is being sold, a trade-in allowance can be used to reduce the tax base. If BMV determines that a “used” vehicle is being sold, a trade-in allowance cannot be used to reduce the tax base.