Price*tax rate
- rebates
- downpayment

That's how they do it

 

How the sales tax is calculated can vary by state. Here in Massachusetts a rebate is not taxed if applied to the purchase of the vehicle at the time of the sale. It's considered a cash discount (which is really what it is since this is how a mfg lowers the price for you). So a negotiated price of 40K and a 3K rebate would result in only being taxed on 37K.

We're also not taxed on trade in value. So if I got 20K for a trade in the same scenario, i'd only be taxed on 17K.

http://www.mass.gov/dor/businesses/c...ax.html#Rebate

 

I was surprised here in Taxachusetts we're the only ones around is area that don't tax the rebate. Looking up Connecticut listed the surrounding states that are just like you guys!

http://www.cga.ct.gov/2006/rpt/2006-R-0189.htm

 

Ford incentives come off the invoice, aka delivery allowance, and rebates ie Costco, holiday cash, conquest comes off after taxes as downpayment... Trades come off price(invoice price in your case) before taxes too