A $3,500 or $4,500 voucher or payment made for such a voucher under the CARS “cash for clunkers” program to buy or lease a new fuel-efficient automobile is not taxable for federal income tax purposes.
[quote]If you traded in a clunker worth $3500, you got $4500 off for an apparent “savings” of $1000. You could have gotten $3,500 if you had just traded the car in.[/quote]
That’s just too funny. At a typical dealership, you’ll be lucky to get $3500 for trading in a 5-year-old Civic.
If you were to trade in a typical clunker (say, a 1995 Ford Explorer 4WD with 120k miles on the odometer), you’d get closer to $1000.
