Does a trade-in lower the sales tax on my new car?

In many states, yes. A lot of states charge sales tax only on the difference between the new vehicle's price and your trade-in value, which can save you a meaningful amount compared with selling privately. However, not every state offers this credit, and some cap it or have special rules. Check your state's revenue department or DMV website for how trade-in credits work where you'll register the vehicle, and factor any savings into the trade-in versus private-sale comparison.