New in 2020 - IL Trade-In Tax

Senate Bill 690, signed into law by Governor Pritzker on June 28th, goes into effect January 1, 2020. Among other things, this bill means that State and Local sales taxes will be applied to any trade-in value over $10,000 - starting on 1/1/20. A consumer who trades in a vehicle valued at over $10,000 will not receive tax credit for the portion in excess of $10,000.
 
The state currently collects no sales tax on a vehicle's trade-in value, which acts as a tax credit toward a new vehicle purchase - and sales tax is currently only applied to the difference between trade-in value and the new vehicle's purchase price.
 
What Does This Mean for You As of January 1st?
 
For example, if someone is buying a $60,000 vehicle and is trading in a vehicle valued at $40,000, the loss of $30,000 trade credit after the new law goes into effect will mean an ADDITIONAL $2475 in sales tax paid for a vehicle registered in Cook County outside the City of Chicago, or $2850 more in sales tax paid for a vehicle registered in the City of Chicago.

If someone is buying a $36,000 vehicle and is trading in a vehicle valued at $20,000, the loss of $10,000 trade credit after the law goes into effect will mean an ADDITIONAL $825 in sales tax paid for a vehicle registered in Cook County outside the City of Chicago, or $950 more in sales tax paid for a vehicle registered in the City of Chicago.

The increase in taxes will not affect the dealership where you purchase your vehicle from. It WILL affect how much every consumer with a trade-in valued over $10,000 will pay in sales tax to purchase any new or pre-owned vehicle.