What Is the Sales Tax on a Car in Illinois?

The car sales tax in Illinois outlines how much people must pay in taxes for their vehicles. This amount varies and is based on several factors. Whether you’re purchasing from a private party, from a family member, or have traded in a vehicle, you have to follow specific tax requirements to continue driving your vehicle legally. Here’s what you need to know about paying sales tax on a car purchased in Illinois.

What Is the Sales Tax on a Car in Illinois?

hand holding a 100 dollar bill in front of a miniature red car
Image via Flickr by marcoverch

Vehicle purchases in the state of Illinois are booming. It’s essential to understand the taxes that come along with them. Depending on where you live, you may be charged a city, county, or state tax or any combination of the three. The state of Illinois charges a 7.25% sales tax rate on all vehicle purchases. County taxes range from 0.25% to 0.75%, while in the city of Chicago, you’re required to pay a 1.25% city tax.

You should also keep in mind that you’ll have to pay the dealership a fee if they take part in putting together your documents. The method of purchase is another determining factor on how much your sales tax will be. For example, for a vehicle purchased from a private party, there may be different requirements. There are also other fees that a buyer may be responsible for, including a titling fee, the cost for a license plate transfer, and the cost of the vehicle registration itself. The average price of sales tax and vehicle registration in Illinois is around $1,000.

Private Party Vehicle Use Tax

The rate for private party vehicle use tax is determined either by the fair market price of the vehicle or the purchase price. The fair market price is used when there isn’t an available stated price, as in the case of a gift. If the vehicle costs less than $15,000, the tax rate is based on the age of the vehicle. If the cost is more than $15,000, the tax rate is based on the vehicle’s purchase price.

Purchasers will also have to pay a $25 flat-rate fee for the purchases of all-terrain vehicles and motorcycles. There’s also a flat-rate fee of $15 to purchase a vehicle from certain family members, business reorganization transfers, and gifts to beneficiaries.

How Is Car Sales Tax Calculated in Illinois?

Several factors play a role in determining the sales tax of a vehicle in the state of Illinois. The combination of factors and the rates predetermined by the state and county you live in will help determine how much you’ll be required to pay in sales tax. To accurately calculate sales tax, you’ll need to include the following:

  • The weight and type of the vehicle.
  • The type of license plate you plan on purchasing.
  • Whether you purchased a new or used vehicle.
  • Illinois state requirements such as price and age of the vehicle and the primary purpose of the vehicle.

Having an idea of how much you’ll be expected to pay for the sales tax of your vehicle in Illinois can be greatly helpful. The help of a financial professional can help ensure you’re paying the amount you should be on time. For further assistance, reach out to Pasquesi Sheppard. Our knowledgeable team would be happy to help clarify any information.

Do You Pay Sales Tax for Rebates and Trade-Ins?

Some dealerships will accept your existing vehicle as a trade-in for an agreed-upon amount set by the dealership. This process is known commonly as trade-in value, and that value will apply to the price of your new vehicle, typically reducing the amount you have to pay for your new vehicle. The sales tax is then applied to the lower cost of the vehicle, allowing you to save money on your purchase.

Another way that dealerships try to attract customers is by offering incentives and rebates to help take money off the price of the car you’re purchasing. These are typically an amount that is reduced from the total cost of the car or truck when you purchase it. For example, purchasing a vehicle worth $26,000 with a rebate of $3,000 would give you a purchase price of $23,000. However, sales tax is determined based on the cost of the vehicle before rebates are applied. Therefore you’ll pay sales tax on all $26,000.

Exemptions to Illinois Car Sales Tax

There are several exemptions to the Illinois car sales tax. The amounts you’re required to pay can be significantly decreased or eliminated based on the criteria below, from work vehicles to family gifts. These reasons will exclude you from paying sales tax on a vehicle you’ve purchased:

  • The purchaser is part of a tax-exempt organization.
  • The vehicle has been implemented for use on farms and is used primarily for the production of agriculture. 
  • The vehicle that was purchased is a ready-mix concrete truck.
  • The use of the vehicle includes rolling stock.
  • The purchaser moved from another state to Illinois, and the vehicle was used in another state for at least three months.
  • The vehicle was a gift from an estate to a surviving spouse.

If any of this sounds like it applies to you, it’s important to bring proper documentation when it comes time to pay sales tax on your vehicle. If you’re unsure, an accountant or financial expert may be able to help.

Reach Out to Pasquesi Sheppard Today

If you need help with vehicle sales tax calculations or any other financial services, reach out to the expert team at Pasquesi Sheppard today. We use a comprehensive approach in a way that’s designed to minimize your overall tax liability and save you money in the long run. You can contact us online or reach us by phone at 847-234-5000 to schedule an appointment. Our office is conveniently located at 585 Bank Lane in Lake Forest. At Pasquesi Sheppard, we look forward to helping you with any of your financial needs, including sales tax on a car in Illinois.