rk911
Thinks s/he gets paid by the post
https://fromthetrenchesworldreport....-jan-1-dealers-call-it-double-taxation/255972
[sigh]. it never ends.
[sigh]. it never ends.
Illinois Imposing Car Trade-In Tax On Jan. 1; Dealers Call It Double Taxation
- Thread starter rk911
- Start date
Sigh. I know. Another naked link.
Beginning Jan 1, buyers will pay sales tax on the entire amount of a new car, even if they trade in a used car as part of the payment. Previously, the value of the trade in was deduced from the sales price for tax calculation.
38Chevy454
Thinks s/he gets paid by the post
IL seems determined to drive residents away due to increasing taxes.
No idea why a trade in, or not, would affect a new car tax. It's just a part of the car payment to me.
They're really sticking it to us here. This is just one of many recent things. That's why 61% of Illinoisans in a recent poll said they are thinking about leaving the state.
https://www.illinoispolicy.org/poll-high-taxes-are-top-reason-illinoisans-want-to-leave-state/
https://www.illinoispolicy.org/poll-high-taxes-are-top-reason-illinoisans-want-to-leave-state/
Ronstar
Moderator Emeritus
In the past, the tax was only on the net cost of the car after trade in.
Now it will be on the price of the new car before trade in.
So the end result is a lot more $ outlay to the purchaser whether it is financed or not.
CardsFan
Thinks s/he gets paid by the post
In most states (but not Illinois next year), the value of the trade-in is deducted from the tax assessment, since you already paid tax on that car. Your actual purchase price is the new car price, less the trade-in.
I used to live in Taxachussetts, but I think IL is taking taxes to a whole new level.
Just_Steve
Thinks s/he gets paid by the post
I would never trade in a car anyway. Private sales only. Dealers ALWAYS try to hose you on a trade.
Bestwifeever
Moderator Emeritus
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A little summary about the story in the link would cause more people to read this thread. I'm out.
OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes, but it isn't necessarily a no-brainer in MN at least. If I trade a $10K car there is no sales tax on the $10K. If I buy for cash, I get clipped $765 in extra sales tax that I have to make up on the private sale just to break even.
RunningBum
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Is there any other product that gets this kind of favorable tax treatment?
OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
You're sort of creeping up on a fairness argument with that question. Remember that fairness is not really the objective of the exercise:
“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
Just_Steve
Thinks s/he gets paid by the post
Which would more than likely be less than the dealer hosing.
Ronstar
Moderator Emeritus
I get that. I just don't understand why it would be that way. If I buy a new computer, the sales tax is on its whole price, not the cost less a traded-in computer.
It is not. The actual purchase price is what you pay for the new car. A trade-in is immaterial unless a state gives you that tax break. What's different than if you sell the old car separately & apply those proceeds to the new car? Answer: nothing. But OK, the change is a tax increase. What else is new?
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OP
OP
rk911
Thinks s/he gets paid by the post
and the buyer in a private sale will pay sales tax to the state based on book value and not what was paid for the car. coming and going. and a lot of folks are going.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes, but even if you don't trade and sell your trade, you still only pay sales tax on the net amount since you have already paid sales tax on the trade.
For example a number of years ago I bought a $30k car and sold what would have been my trade to a third party for $10k... I filed out the paperwork and only paid tax on the $20k difference.... the same as if I had received $10k in trade.
My sister moved to Texas a few years ago but still have a house in IL... I've been encouraging her to sell the house in IL since IL is such a mess.
Ronstar
Moderator Emeritus
I know. Its different for cars. It’s just the way that it has been for as long as I can remember. It was an incentive to trade in your old car when buying a new one.
So I guess it’s really a tax break that is going away.
Bamaman
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Auto sales taxes running 8.75% to 10.25%? That's a small fortune.
Alabama state sales taxes on automobiles and boats are 2.5%, and we receive credit for the trade in values.
I used to work in Illinois but lived in Indiana. IN was bad enough. But many of my co-workers lived in Illinois because taxes in Wisconsin, where their offices sat, were far higher even--if that's possible.
Alabama state sales taxes on automobiles and boats are 2.5%, and we receive credit for the trade in values.
I used to work in Illinois but lived in Indiana. IN was bad enough. But many of my co-workers lived in Illinois because taxes in Wisconsin, where their offices sat, were far higher even--if that's possible.
Ronstar
Moderator Emeritus
This could hurt Chicago car dealers where tax is 10.25%. Car buyers could save $2k in tax on a $50k car by buying in a no city, no county tax area in Illinois at 6.25%.
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Tax is 6% in Michigan and it’s always been that way. You pay tax on the entire value regardless of any trade in or whatever. The only situation I’ve heard that I consider worse is in Texas where I understand that when you lease a car, you pay sales tax on the entire value of the car. In Michigan, you only pay the sales tax on the lease payment. You pay it each month as a component of the lease payment.
Senator
Thinks s/he gets paid by the post
I do not think there is any other product that the private buyer of the used product still has to pay sales tax.
If I buy a used mower, a horse, a weight set, a computer, etc. no sales tax is due.
If I buy a used car, sales tax is due (again).
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
No, I tried that.
Bought the new vehicle, paid the lower tax where the dealer was located.
Six months later I get a bill from the State for the rest of the sales tax because I was located in a higher tax rate city than the dealer.
Ronstar
Moderator Emeritus
Incredible. I forgot that the state did that. I bought a vehicle in Arizona, and I registered it in Illinois. I remember that Illinois checked to make sure that I paid at least as much tax as if I was buying it in Illinois. Az tax was more than Il so I was ok.
