Don’t wait. Buy a car now and avoid Illinois’ upcoming trade-in tax.
When you upgrade to a new vehicle, timing is everything. Year-end sales are a great time to buy, as dealers are eager to meet their end-of-the-year sales quotas and make room for newer models. But this year, there’s an extra reason to make your purchase before December ends. Starting January 1, 2020, a new Illinois law could cost you big bucks if you decide to trade in a vehicle.
Prior to Senate Bill 690, Illinois did not collect tax on a vehicle’s trade-in value. But, under next year’s new law, trade-in credits greater than $10,000 will be subject to state and local taxation. This tax applies even if you go to another state to trade in your car.
So what does this mean for your wallet? Let’s run some numbers.
For example, if you trade in an old vehicle worth $18,000, the first $10,000 of it is tax-free, but everything after that ($8,000) will be taxed. The average sales tax rate in Illinois, combining both state and local taxes, is 8.74%. That means you could pay approximately $700 extra in sales tax if you wait until next year to trade-in this vehicle.
If you’ve been considering purchasing a new vehicle, act fast before the year ends. You’ll benefit by avoiding the upcoming trade-in tax while also taking advantage of the dealerships’ great year-end discounts. Scott Credit Union can help make your new car affordable with our low rates and flexible terms. View our current vehicle loan rates.