Illinois Auto Trade-In Tax 2020

 


If you're an Illinois resident, you've likely heard about the tax credit on trade-in vehicles. It's going into effect on January 1, 2020, which is right around the corner. If you're looking to trade in your vehicle, the time is now. If you wait until after the New Year, you'll be paying a significantly larger sales tax than the current law requires.

The new Illinois state and local sales tax will apply to all trade-in vehicles over $10,000. Say you are buying a new car for $40,000 and trading in your old one for $25,000. As of right now, you'd pay sales tax on the difference of $15,000. This would roughly equate to $1,311.

Once 2020 hits, you'll pay that same $1,311 on the difference, plus tax on the rest of your trade-in vehicle above $10,000. That means an additional $1,311 on the $15,000 of the trade-in vehicle. In total, the sales tax comes to $2,622. That's twice the amount you'll pay than if you trade-in a vehicle before the end of the year. If you're buying and trading more expensive vehicles, or trading vehicles often, then the difference will be even larger.

   
 

Some people call it double taxation, since you paid tax on the trade-in vehicle when you bought it to begin with. So you pay tax when you buy it and you pay tax when you sell it. The tax even applies to out-of-state purchases, so you really can't get around it. The state already upped the tax on motor fuel to help with infrastructure and budget and this is another way they plan to support that monetary need.

Here's the bottom line: if you're looking to trade-in for a new vehicle, do it before the end of the year to save a significant amount. Look no further than Howard Orloff for new and used Volvo, Jaguar, and Land Rover vehicles. Give us a call at 888-834-2169 or visit our Chicago showroom to get a closer look at our selection.