Originally Posted by tony20009
As far as I know, all discounts are applied before taxes unless your state is offering some sort of tax abatement. Generally, the lower the car price, the lower the sales/excise/titling (depending on which state you live in) tax, although some jurisdictions base part of their taxes on the car's weight. Dealers and manufacturers are fully within their bounds to raise/lower the car price. They have no authority to alter the tax rate. That lack of authority is why discounts are before applying the tax.
it depends on the state. the tax rate has nothing to do with it, but where they put discounts, rebates, trade ins etc does. Your profile lists DC, so I will use two examples from your surrounding area:
Maryland, tax is "based on the agreed upon price of the vehicle by the buyer and the seller including any dealer processing charge, with an allowance for trade-in consideration. Manufacturer rebates are taxable, however dealer rebates and discounts are not. All rebate, trade-in, or discount information must be clearly marked on the bill of sale."
wherease Virginia tax is "based on the gross sales price price after the manufacturers' discounts or dealer price discounts. Gross sales price does not include any other price reductions, such as credit for trade-ins, rebates, unpaid liens or other unpaid credits."
The USAA rebate is not a manufacturer discount, but a check USAA gives the dealership for agreeing to give you a certain USAA pricing of the vehicle. You can't be charged a tax on something you aren't being given and the dealership can't collect a tax on something they are being given--at least not a sales/excise tax. In either MD or VA, the USAA discount the dealership is going to get reimbursed for would be applied after tax.