Illinois will soon tax trade-in car value, even for out-of-state purchases

Due to a new broadening of the sales tax, Illinois residents won’t get as much back in value when they trade in their cars for new ones. The Center Square

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Due to a new broadening of the sales tax, Illinois residents won’t get as much back in value when they trade in their cars for new ones.

Beginning in 2020, a new law signed by Gov. J.B. Pritzker will apply Illinois’ sales tax to any traded-in vehicle’s worth over $10,000. 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.

Pete Sander, president of the Illinois Automobile Dealers Association, said it could mean Illinois residents put off getting a new car or won’t be able to afford as much car as before.

“There’s no question that it could have a large impact on the industry,” he said, adding that a tax on the trade-in value of a car amounts to taxing the vehicle twice because it was taxed once at the original purchase.

Some Illinoisans may look to buy a car in another state, but Sander said it’s not something they can bypass at an out-of-state dealer.

“According to the tax code, there’s a provision that the state can collect that in [the registration change] and you’d be required to pay that tax but that might happen thirty or sixty days after the sale,” he said.

The association hopes to negotiate a better deal with lawmakers in the coming veto session.

The tax, Sander predicted, will mainly affect luxury cars, but it will affect more mid-level family cars over time as inflation eventually increases the cost of vehicles.

According to financial site Zacks.com, 42 of 50 states offer some sort of credit for the value of the traded-in car, most exempt the net cost of the trade-ins, as Illinois will do until 2020.

The Center Square

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2 thoughts on “Illinois will soon tax trade-in car value, even for out-of-state purchases

  1. I am done with all of your taxing us in Illinois. You people don’t know how to handle the money we have paid in the past and even robbed us and you don’t qualify for handling money now. Why don’t you dip your fingers into your bank account and bail this state out. You have enough plus and while you are at why don’t all of you give up your pay checks just like we do. And then you went with this stupid gas tax between you and the gas companies the people of Illinois don’t stand a chance. It is time to move out of this state

  2. Doesn’t matter what i think or anyone else. I did not vote for Pritzker or would i ever! They all sit and make what laws they want. my Mother always said Two things in life were certain Death and Taxes!

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