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August 28, 2009 07:07 PM

'Clunker Tax' Update

 
Some South Dakotans have been surprised to find that the money they're receiving from the federal government for cashing in their clunkers is taxable in South Dakota.
KELOLAND News first told you about the excise tax earlier this week.

Minnehaha County Treasurer Pam Nelson told KELOLAND news about the surprise. She's received several phone calls since the story aired questioning whether she was right and whether she's knocking the federal program.

“But I didn't say it wasn't a good deal, because it was. Because if you got $4,500 from a car that's not worth $4,500, it's still a good deal even if you have to pay $120 tax,” Nelson said.

The tax is necessary in South Dakota because state law requires taxes on the purchase price and government rebates. That means you can expect to pay three percent on the government's rebate when paying for taxes and licenses.

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