What Is Sales Tax on a Car in Illinois?
When purchasing a car in Illinois, one important factor to consider is the sales tax. Sales tax is essentially a tax imposed on the sale of goods and services, including vehicles. In Illinois, the sales tax on a car varies depending on several factors such as the purchase price, location, and any applicable exemptions. Understanding the sales tax guidelines in Illinois is crucial to avoid any surprises or confusion when buying a car. In this article, we will delve into the details of sales tax on a car in Illinois and answer some frequently asked questions to provide a comprehensive guide.
1. How is the sales tax on a car calculated in Illinois?
The sales tax on a car in Illinois is calculated based on the purchase price of the vehicle. As of July 1, 2020, the state sales tax rate in Illinois is 6.25%. However, additional local taxes may apply, depending on the county or municipality where the vehicle is purchased.
2. Are there any exemptions to the sales tax on a car in Illinois?
Yes, there are a few exemptions to the sales tax on a car in Illinois. For example, if you are a non-resident of Illinois but purchase a car in the state and immediately take it out of Illinois, you may be exempt from paying sales tax. Additionally, certain organizations, such as charitable organizations or government agencies, may qualify for exemptions.
3. Do trade-ins affect the sales tax on a car in Illinois?
Yes, trade-ins can affect the sales tax on a car in Illinois. If you trade in a vehicle when purchasing a new one, the trade-in value is deducted from the purchase price of the new vehicle, which in turn reduces the sales tax owed.
4. Are there any additional fees associated with the sales tax on a car in Illinois?
Yes, there may be additional fees associated with the sales tax on a car in Illinois. These fees can include title fees, registration fees, and documentation fees. It is important to inquire about these fees when purchasing a car to avoid any surprises.
5. Can I finance the sales tax on a car in Illinois?
Yes, you can finance the sales tax on a car in Illinois. Many car dealerships offer financing options that allow you to include the sales tax in your loan. However, it is important to consider the interest and overall cost of financing the sales tax before committing to a loan.
6. Is the sales tax on a car in Illinois the same regardless of the type of vehicle?
Yes, the sales tax on a car in Illinois is the same regardless of the type of vehicle. Whether you are purchasing a new car, used car, or even a motorcycle, the sales tax rate remains the same based on the purchase price.
7. What is the sales tax rate for Cook County, Illinois?
In addition to the state sales tax rate of 6.25%, Cook County, Illinois, imposes an additional sales tax of 1.75%, making the total sales tax rate in the county 8%. This additional tax applies to vehicles purchased within Cook County.
8. Are there any sales tax exemptions for electric vehicles in Illinois?
Yes, there are sales tax exemptions for electric vehicles in Illinois. Under the Illinois Vehicle Code, qualified electric vehicles are exempt from state sales tax. However, this exemption only applies to the first $10,000 of the purchase price.
9. Can I get a refund on sales tax if I move out of Illinois?
If you move out of Illinois within 90 days of purchasing a vehicle, you may be eligible for a sales tax refund. To qualify, you must provide proof of residency in another state, surrender the Illinois license plates, and provide documentation proving the vehicle has been registered in the new state.
10. Can I avoid sales tax by purchasing a car out of state?
If you purchase a car out of state and bring it into Illinois, you will still be required to pay the Illinois sales tax. Illinois has strict regulations regarding out-of-state purchases, and failure to pay the sales tax can result in penalties.
11. Are there any sales tax exemptions for veterans in Illinois?
Yes, veterans may be eligible for sales tax exemptions in Illinois. Veterans who have a service-connected disability of at least 10% are exempt from paying sales tax on the purchase of a vehicle. Proper documentation, such as a letter from the U.S. Department of Veterans Affairs, is required to claim this exemption.
12. Can I get a sales tax credit for a totaled or stolen vehicle?
If your vehicle is totaled or stolen, you may be eligible for a sales tax credit when purchasing a replacement vehicle. The credit is calculated based on the sales tax paid on the original vehicle and can be applied to the purchase of a new vehicle within 180 days.
In conclusion, understanding the sales tax on a car in Illinois is crucial when purchasing a vehicle. The sales tax rate is determined by the purchase price, location, and any applicable exemptions. It is important to consider additional fees associated with the sales tax and explore financing options. Being aware of the various exemptions, such as those for trade-ins, electric vehicles, veterans, and out-of-state purchases, can help save money. Lastly, in the event of a totaled or stolen vehicle, a sales tax credit may apply when purchasing a replacement. By familiarizing yourself with the sales tax guidelines in Illinois, you can navigate the car buying process with confidence.