Did you know...?
Starting January 1, 2020, local sales tax will be applied to any trade-in value over $10,000!
Here is an example of what the change will cost using the combined state & local average sales tax of 8.74%:
In the example above, an Illinoisan buying a new vehicle for $35,000 - about the average cost in 2018 - and trading in their car valued at $20,000. Currently, they would only pay sales tax on the difference, or $15,000. The average sales tax on this transaction would be roughly $1,311.
In 2020, trade-in credit above $10,000 will be taxed in addition to the difference between the new and used car prices. In this example, the $20,000 trade-in will not be taxed on the first $10,000 in value, but the remaining $10,000 gets taxed along with the $15,000 difference between the new and used car values. So sales taxes will be applied to $25,000 of the transaction, which will cost them $2,185.
So the same car deal will cost you an extra $874 in sales tax if you wait until Jan.1!