Here is how it works.
1) If you only sell your car to a dealer you get the money for the car and no tax (refund I assume)
2) If you trade it in and buy a new car from the same dealer at the same time, the tax on the new car will only be applicable to the difference between the new car price and the trade in.
Not sure why you would do 1), but I guess people take their car to CarMax
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