https://www2.illinois.gov/rev/research/taxinformation/sales/Pages/rot.aspx A buyer is trading in a $30,000 car for a 2018 Tesla Model 3 Long Range Dual Motor priced at $45,000. Currently, combined sales tax rates in Illinois range from 6.25 percent to 11 percent, depending on the location of the sale. In 42 states, the sales tax you pay will be on the value of your new vehicle minus the trade-in allowance amount. SalesTaxHandbook is a free public resource site, and is not affiliated with the United States government or any Government agency, Sales Tax Handbooks By State | To learn more, see a full list of taxable and tax-exempt items in Illinois. While Illinois' sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. That means trading in a $30,000 car for one worth $60,000 will cost the customer an extra $1,200 in additional sales taxes. ... As of January 1st of this year, Illinois officially taxes the value of a trade-in worth 10,000 or more. Illinois is imposing a car trade-in tax on Jan. 1. Sales tax only applies to the difference between the determined trade-in … Technically, the law caps the vehicle trade-in tax credit at $10,000. Sales Tax Calculator | We value your feedback! The average sales tax on this transaction would be roughly $1,311. Are Trade-Ins subject to sales tax? Therefore, sales tax is owed on $25,000 instead. No longer will the entire value of your trade save you from paying sales tax on the purchase of your next vehicle. The tax is measured by a corporation’s paid-in capital after apportionment to Illinois, and unlike Illinois’ other taxes, it is administered by the Illinois Se… Another Illinois Tax: Car Trade-In Tax. Oregon has no sales tax, so if you buy a vehicle there, you pay no taxes. The logic of the system is that buyers have already paid tax on the value of their car once, and shouldn’t need to pay taxes on it again when trading it in. Illinois will impose a car trade-in tax on January 1, 2020. This means that a trade in could act as an untaxed credit toward a new vehicle purchase. Last sales taxes rates update. Your car is worth more today, than it will be next year. The buyer will only be taxed on a total of $15,000, instead of $45,000. The sales tax bill on that same transaction goes up nearly $900 in 2020. IL sales tax on vehicle trade. With the average Illinois sales tax rate being approximately 8.75%, this change could mean thousands of dollars in additional sales taxes being owed on the purchase of a new vehicle. We read every comment! Instead, Illinois’ sales tax will apply to any trade-in vehicle worth more than $10,000. Illinois residents won't be able to avoid new trade-in tax by buying cars in Northwest Indiana, but another new tax may eventually drive more people from the south suburbs across In a mere five months, Illinois residents must start paying a tax on trade-in vehicles worth over $10,000. Illinoisans with more expensive vehicles who are looking to upgrade soon could stand to save thousands by making their new vehicle purchase before the end of the year. If a trade-in is worth more than that by any amount, the buyer only receives a $10,000 credit. We provide sales tax rate databases for businesses who manage their own sales taxes, and can also connect you with firms that can completely automate the sales tax calculation and filing process. The total sales tax bill will be $2,450 instead of $3,150 – leaving the buyer paying $1,350 more in sales tax on the same transaction than if they had purchased the vehicle earlier. That’s over $2,000 in savings, just for trading a vehicle in. Beginning January 1, 2020 a maximum of $10,000 of the trade-in value of the old vehicle is exempt from Illinois sales tax. J.B. Pritzker will apply Illinois’ sales tax to any traded-in vehicle’s worth over $10,000. Other state residents such as Indiana residents will not be impacted by this new $10,000 cap. The last rates update has been made on July 2021. Beginning in 2020, a new law signed by Gov. You then add state tax and miscellaneous fees. In California, Hawaii, Kentucky, Maryland, Michigan, Montana, and Virginia, you pay the sales tax rate on the full value of the new vehicle you’re buying. On January 1 st, 2020, a change in Illinois tax law will go into effect, drastically reducing the amount that can be saved on sales tax when trading a vehicle in. There is still some value to trading in a vehicle after the new rule goes into effect, and buyers with older/less-valuable trade-ins won’t be negatively affected at all. If a trade-in is worth $10,000 or less, the full value would be received. good job illinois, 1551 W Jefferson Ave., Naperville, IL 60540, The Past, Present, and Future of Electric Vehicle…. That means trading in a $30,000 car for one worth $60,000 will cost the customer an … 101-0031 amended the Retailers' Occupation Tax Act and the Use Tax Act to redefine the "selling price" subject to Sales and Use Taxes for sales and purchases of motor vehicles when a customer trades in a first division motor vehicle. Sales tax will be paid based on a total of $35,000. Currently the state collects no sales tax on trade-in value, but that changes on Jan. 1. A new law, titled Leveling the Playing Field for Illinois Retail Act, will apply Illinois' sales tax to the value of vehicle trade-ins over $10,000 rather … Illinois currently only taxes trade-ins worth more than $20,000, so the tax on a new $35,000 car would be about $1,300. This page describes the taxability of trade-ins in Illinois. The least a driver looking to trade-in will face is 6.25% in sales tax, the state’s rate. J.B. Pritzker, state and local sales tax will be applied to any trade-in value above $10,000. But there is one specific carve-out to the new law. J.B. Pritzker, state and local sales tax will be applied to any trade-in value above $10,000. Let us know in a single click. Automate your business's sales taxes! For many years, Illinois has imposed its franchise tax on domestic and foreign corporations for the authority to transact business in Illinois. Traditionally, a sales tax credit is applied to the purchase of a new vehicle when using an old one to help pay for it, reducing how much sales tax a buyer needs to pay for the whole transaction. So people who trade-in cars worth more than $10,000 will pay between 6.25% and 9.5% in sales tax, depending on county and region. The three lightning bolts logo is a registered trademark of Current Automotive. Instead, Illinois’ sales tax will apply to any trade-in vehicle worth more than $10,000. With a 7 percent sales tax, what would have been a $3,150 sales tax bill is instead only $1,050. Starting January 1st 2020, sales tax will be charged on trade-ins above $10,000. When do these changes take effect? Municipalities often add their own sales tax, averaging 2.49%. Statewide the … Currently, the state of Illinois does not collect sales tax on a car's trade-in value. Be sure to review details of your specific scenario to learn how you will be taxed. Currently, Illinois does not charge sales tax on vehicle trade-in value. Prior to 2020, Illinois did not collect a sales tax on a car’s trade-in … Municipalities often add their own sales tax, averaging 2.49%. With the same cars as the above example – the taxable value of the Model 3 purchase is reduced only by $10,000, even though the trade-in is worth $30,000. 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