Michigan Gov. OKs Tax Break; RVers to Benefit
Michigan residents buying a car, recreational vehicle or boat will see a tax break if they trade in an older model under legislation signed and celebrated Wednesday by Gov. Rick Snyder.
“It may be rainy out today, but it’s a sunny day for Michigan, because we’ve got relief for taxpayers,” Snyder said during a press conference inside a Shaheen Chevrolet showroom in Lansing. “They deserve it.”
MLive.com reported that the Republican governor was joined at the dealership by sponsoring Sen. Dave Robertson and Rep. Andrea Lafontaine, along with Senate Majority Leader Randy Richardville and House Speaker Jase Bolger.
The new law, years in the making, will exempt the value of a trade-in from the taxable purchase price of a new car, boat or RV.
Supporters say Michigan was one of just six states — and the only in the Great Lakes region — that applied its 6% sales tax to the full sale price even if the transaction included a trade in, which put local dealerships at a competitive disadvantage.
“This is one of those rare instances where we have a win, win, win,” said Richardville, calling the bill good news for manufacturers, dealerships and and customers.
Michigan boat buyers will be able realize full savings beginning Nov. 15, but the tax break on cars and RVs will start in December and be phased in slowly.
A car or RV buyer will initially be able to exempt a trade-in value of up to $2,000 from the sales tax. The maximum trade-in value would increase by $500 annually over the course of the next 25 years.
A customer who buys a car this year could save up to $120 with a trade-in. The maximum tax break will increase by $30 each year beginning in 2015.
Doug Fox, president of the Michigan Automobile Dealership Association, said customers looking for a new car should not wait for the law to take effect.
“Many, many dealers across the state have already started implementing a rebate or credit program for the trade-in,” he said.