THE NEW 2020 ILLINOIS TRADE-IN TAX LAW IS HERE!
WHAT IS THE NEW TRADE-IN TAX?
The new Illinois trade-in tax law became effective as of January 1st, 2020. This new trade-in tax eliminates the tax benefit of trading in your vehicle.
WHAT DOES THIS MEAN?
Before January 1st, 2020, Illinois collected no sales tax on the car's trade-in value. Before, your car acted as an untaxed credit towards your new vehicle purchase. Starting on January 1st 2020, sales tax will be charged on any trade-in valued over $10,000.
| Before January 1st, 2020 | After January 1st, 2020 |
| Â New Car Price | Â $65,000 | Â New Car Price | Â $65,000 |
| Â Current Vehicle Value | Â $38,000 | Â Current Vehicle Value | Â $38,000 |
| Â Trade-In Tax Credit | Â $38,000 | Â Trade-In Tax Credit | Â $10,000 |
| Â Taxable Amount | Â $27,000 | Â Taxable Amount | Â $55,000 |
| Â Tax Paid | Â $2,430 | Â Tax Paid | Â $4,950 |
| Â Total Cost | Â $29,430 | Â Total Cost | Â $31,950 |
For instance, if you traded-in a vehicle valued at $38,000, before January 1st 2020, for a new vehicle valued $65,000, you would receive a credit worth your current vehicle value, and only be taxed on the difference.
Starting January 1st, 2020, you will only receive a trade-in credit of $10,000, instead of the value of your vehicle, making the taxable amount of your vehicle $28,000. Plus you will still be paying tax on the cost of your trade ($27,000), making the total taxable amount $55,000.
You can get the best estimated value for your vehicle right now at any of our locations.
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