State lawmakers have reached a deal to give a tax break to car buyers who trade in old vehicles.
Both the state House and Senate passed bills Tuesday that would deduct the trade-in value of the old vehicle from the taxable value of the new one.
For example, say you’re trading in a car worth $10,000 to buy a $30,000 dollar car. Right now, you have to pay sales tax on the full price of the new vehicle. Under this legislation, you would only pay sales tax on $20,000.
“I’m excited because we’re giving something back to the average consumer,” Senate Majority Leader Randy Richardville (R-Monroe) told reporters Tuesday. “And not only something back - we’re giving something back that relates to the auto industry, which is kind of big in Michigan.”
The change would also apply to boats and recreational vehicles.
Governor Rick Snyder has voiced concerns about a possible $200 million budget hole the plan could create once fully implemented. But Senate Bill 89 and House Bill 4234 phase in the tax break over a number of years. Their movement in the legislature Tuesday could indicate that a deal has been reached between legislative leaders and the governor.
The plan is expected to get final legislative approval Wednesday before going to Snyder’s desk.