Illinois Tax Law Change

New Illinois Tax Law will be effective starting
January 1st, 2020.

Illinois will begin to charge sales tax on trade-in vehicles over $10,000 beginning January 1st, 2020.

 Before January 1st, 2019  After January 1st, 2020 
 New Car Price:$35,000 New Car Price: $35,000
 Trade-In tax credit: $20,000 Trade-In tax credit: $10,000
 Taxable Amount:  $15,000 Taxable Amount:  $25,000
 Sales Tax: $1,311 Sales Tax: $2,185
   Difference: + $874
 
The state currently collects no sales tax on a car's trade-in value, which in practice acts as credit toward a new vehicle purchase. By law, sales tax only applies to the difference between trade-in value and the new vehicle's purchase price.

Both proposals - House Bill 3890 and House Bill 3891 - would amend the Use Tax Act and Retailers' Occupation Tax Act by reversing a new law that expands the scope of sales taxes in the state to include used cars' trade-in value greater than $10,000.

When is the best time to trade-in?
    
If you are looking to trade in a vehicle it would be ideal to trade in before the new tax law effective in 2020.

Source: Illinois Policy and The Center Square

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