Owning a luxury vehicle sets you apart on the road. It speaks to your ability to dispose of income on superior innovation and technology.
Before you invest in your next luxurious car or SUV, you need to know about the Illinois auto sales tax.
Knowing vehicle laws in your state protects you from tyrannous dealership practices. It also helps you make sure you’re acting lawfully in your purchase.
Also, the business of a car sale has to do with several contracts and agreements. You’d be doing yourself a favor by being knowledgeable of the laws the govern them.
The latest Illinois auto sales tax is already causing a stir in the luxury vehicle market. Here’s how this new car tax could affect you.
1. The Illinois Auto Sales Tax Affects Your Luxury Trade
The new car smell only lasts for so long, then the excitement of having the latest car fades. People keep brand new vehicles for four to six years then they consider trading them.
Before you trade, here’s how the new law affects your luxury exchange.
As of January 1st of this year, Illinois officially taxes the value of a trade-in worth 10,000 or more. The old law was $20,000 and upward. You then add state tax and miscellaneous fees. How does it work?
The original tax formula works like this:
- Taxable Total = (the price of the purchased vehicle) – (the old car’s trade-in value)
- Ex: (for a car purchased in 2019)
- $40,000 (new car) – $12,000 (trade-in) = $28,000 (taxable)
- $28,000 x 6.25% (state tax) = $1,750
- The new tax formula works like this:
- Taxable total = (the price of the purchased vehicle) – $10,000
- $40,000 (new car) – $10,000 = $30,000
- $30,000 x 6.25 (state tax) = $1,875
As you can see, you pay more for your trade-in under the new law. Keep in mind you still have to pay tag, title, registration, and dealer fees.
There’s an exemption for cars with trade-in value that falls beneath $10,000. Take this in consideration when you’re trading or selling a vehicle.
Because luxury cars are built for performance, they require premium fuel. Premium fuel costs almost $.50 to .$60 more than regular gas, depending on your geographical location.
Illinois gas tax doubled, toppling .$38 cents per gallon. If you use your luxury car for more than local trips to the grocers or dry cleaners, expect to pay more at the pump.
A car with a tank size of 14 gallons or more can cost you almost $50 per fill-up. If you fill up more than once a week, that’s almost an additional $400 per month for gas.
3. Additional Fees
As touched on earlier, the new law affects additional fees for the purchase of a vehicle.
- Title – $150, up from 2019s $95 fee.
- Registration – $150, almost $50 less last year
- Dealer Fee – $300. This fee is subject to change at the discretion of the secretary of state.
Expect to pay more out of pocket at signing.
Know the Law
You invest more in technology and luxury in your vehicle, so familiarize yourself with the Illinois auto sales tax.
The additional costs could mean the difference in purchasing a $50,000 luxury car vs. $100,000.
If you’re interested in more tips like this, check out our Jetset lifestyle guide. Stay in the know about what’s current and trending.