Illinois’ Tax On Car Trade-Ins Goes Up In 2020
If you're considering trading in your used car so you can buy yourself something new, you might want to move quickly. After the new year, the trade-in credit is going down and the sales tax is going up.
Our friends down in the state legislature raised taxes on a whole bunch of things in the new budget earlier this year, but the biggest additional expense will be for car buyers who trade in their old car.
Illinois currently only taxes trade-ins worth more than $20,000, so the tax on a new $35,000 car would be about $1,300. But in 2020, the state will tax the value of any trade-in worth more than $10,000, making the sales tax $2,185.
Among the 20 taxes and fees were six new ways to take money from the state’s drivers. In total, Illinois drivers will pay an additional $1.92 billion in various taxes for driving, parking, selling or simply owning a vehicle.
Illinois is taxing drivers significantly more to get rid of their cars. Illinoisans will be charged both state and local sales taxes when they trade in a vehicle over $10,000. This will generate another $60 million, which, again, is not helping improve roads but rather going to those pickleball courts, dog parks and other vertical infrastructure. The trade-in tax will average nearly $1,000 more and is a form of double taxation. Owners were charged sales taxes once when they bought the cars new and are being taxed a second time for those cars when they are traded for another new car.
"It's an unfair tax. It's not right to tax both when they buy something and when they sell it and that's what this is doing," said Austin Berg, from the Illinois Policy Institute.
The tax was part of the Gov. JB Pritzker's $45 billion "Rebuild Illinois" infrastructure plan. Car dealers lobbied against the tax in Springfield and are hoping to get it repealed next year.
But in the meantime, they say now is the time to buy, before the new taxes take effect.
"It's truly a savings. If you have a trade in worth $25,000, it would cost an extra $1,400. It's real money," said Bill Haggerty, of the Chicago Auto Trade Association.
Aside from the trade-in tax, it will also cost more to register your car, to buy gas, or even to park it in Illinois - in all, nearly $2 billion.
Are you really surprised that Illinois leads the entire Midwest in people leaving for elsewhere?