Maybe I don't understand but it seems to me that the answer is clear. The dealer is suggesting that they will tax you on a number that is not the actual transaction amount. Thats sounds ludicrous to me. It should be obvious that when the $4500 is taken off the MSRP/x amount over invoice price resulting in a final SELLING PRICE, that final price then becomes the figure you would be taxed on. I cannot understand how one could be taxed on a transaction amount that did not actually occur.

Please correct me if I am wrong using the following example.

Vehicle has MSRP of $65,000 and you buy vehicle for $60,000 and tax is 6%, your out of pocket money is $63,600.

You buy MSRP $65k vehicle for $60,000 and get $4500 eco credit resulting in final selling price of $55,500 plus 6% tax so out of pocket is $58,830 ($55,500 +6%/$3,330)

If I understand correctly, your suggesting that in some states the $60,000 "price" is taxed resulting in a $63,600 number and then the $4500 is subtracted from that resulting in $59,100. I find this difficult to believe. If that was the case any retail sales or other sales would be taxed at "list" price which is not the actual transaction price and in this case is $65k. If this is being done, it should be challenged as I don't get it.

In Massachusetts, this does indeed happen but only on purchases of used vehicles, boats, RV's etc. from private parties. It doesn't matter what you paid or what your bill of sale states, when you go to register it, you are taxed on the book value, even though it may be more than the actual selling price.

I don't see how the state can collect taxes on a new vehicle purchase based on an amount that was not the actual transaction price. If that was the case all transactions would be taxed on MSRP and then discounts would be applied after that, I don't think so. I think it's another "profit center" for the dealer that may not be challenged by most.

It's like the $495 dealer documentation fee that was added on to my invoice after the negotiation. This is one of the best ideas ever conceived by the dealers to insure they would pocket this pure profit on every vehicle they move through the store. When the SA presented me with the purchase agreement where that number is preprinted and supposedly non negotiable, I told him it was deal breaker as I refuse to pay someone $500 so they can do the paperwork to sell me something. It was immediately cut in half, by taking the other half off the sales price. It's just part of the game for them and those that don't pay attention, pay the money.