Calculating sales tax if you trade in a vehicle?

[applecrispy]

Hello, I'm trying to figure out if we get the Sales tax benefit if we trade-in our vehicle. I want to figure out if it makes more financial sense to trade-in the vehicle at the same time we buy our new vehicle or if we try to sell it outright if we would get more money that way. 

We live in NY, we want to trade in Vehicle A for Vehicle X. Vehicle A is financed and has a vehicle loan of $10,000 on it. Vehicle X we're buying costs $15,000. If we get a trade-in value for exactly the amount of the loan we want to pay off, $10k, will we still get the Sales tax benefit of $5,000 or nothing at all since the Dealership has to pay off our loan? 

[ohgillian]

In general, you'll get more money selling it outright and the sales tax benefit you get from a trade-in is unlikely to offset that difference. But you're right that there is a sales tax benefit from the trade in; the value they give you (so, $10,000) acts like a credit that reduces the total taxable sale.

Note, some states have started capping the sales tax benefit from trade ins; Illinois just did this, with a $10k cap.

ETA: www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/taxable_receipt.htm; for what it's worth, they don't mention a cap.