Illinois State Tax FAQ
Illinois Sales Tax – Frequently Asked Questions
Understanding Vehicle Costs in Chicago: A Guide to Fees and Taxes
Buying a vehicle in Chicago can feel overwhelming with all the different prices, fees, and taxes involved. Here’s a breakdown to simplify the process as of 1 January 2024:
- MSRP: The Manufacturer’s Suggested Retail Price serves as the starting point for pricing.
- Additional Fees: Buyers in Illinois will also need to account for registration fees and document fees.
Want to know exactly what to expect? Check out our guide to see a detailed breakdown of what you’ll pay when purchasing a car in LaGrange!
How Is Sales Tax Calculated?
Your sales tax and tag fees are based on these items:
- The county your vehicle is registered in
- How much your vehicle weighs
- The type of license plates
- The state you live in
- Whether you’re buying a new or used vehicle
What is the Sales Tax On a Car in Illinois?
Illinois Has 3 Different Vehicle Sales Tax Rates, based on the address of the vehicle registration
- 9.5% in the city of Chicago
- 8.25% in suburban Cook County
- 7.25% outside of Cook County and Chicago
How Will Leasing Affect a Car’s Sales Tax in Illinois?
When you lease a car in Illinois, you pay the sales tax on the cost of your new or used car. However, you’ll only owe tax on your monthly payment rather than on the total value of your vehicle.
If you decide to purchase your vehicle at the end of your lease, you’ll pay a sales tax on the depreciated price.
Will a Vehicle Trade-In Affect Paying Illinois Car Sales Tax?
Big News for Vehicle Buyers: Full Trade-In Tax Credit Restored!
Great news for anyone considering a new vehicle purchase! The vehicle trade-in tax credit is back in full force. Here’s what this means for you:
- Full Tax Credit on Trades: The trade-in tax credit has been reinstated as a full credit, with no cap on the amount.
- No Limitations: The previous tax credit limit has been removed, giving buyers even greater savings potential.
- Pay Tax on the Difference: If you own your trade-in vehicle outright (with no loan payoff), you’ll only pay sales tax on the difference between your trade-in’s value and the price of your new vehicle.
This change can result in significant savings when upgrading to your next car, truck, or SUV. Are you thinking about making a move? Now might be the perfect time!
Do I Have to Pay Illinois Sales Tax On a Car I Bought Out Of State?
If you live in Illinois and buy a vehicle from an out-of-state dealer, and the sales tax is lower in that state, you must pay the difference in tax to the Illinois Department of Revenue. For example, Missouri currently has a state sales tax of 4.225%, whereas Illinois has a sales tax of 6.25%. That is a 2.025% difference.
Learn More With Our Financing Department!
Managing the taxes, fees, and price of buying a new car in Illinois can be confusing. Contact us with your questions and our team of financial experts will help you organize all the costs for a new vehicle. We’ll also help you apply for financing to make sure you’re getting the best deal for your budget. You can learn more about auto finance on our Finance Hub, with information about tax exemptions on your car purchase and how to trade in your car.