Illinois' tax on car trade-ins is going up in 2020

Now is the time to trade-in your car if you're planning to buy a new one. After the new year, the trade-in credit is going down and the sales tax is going up.

Chris and Mitchell Zych are car shopping, wanting to make a deal before the end of the year, rather than 2020 when it's going to be more expensive.

"I knew of the new law and it's gonna hurt car sales in Illinois for sure," said Mitchell Zych.

The state legislature raised numerous taxes in the current budget earlier this year, and the biggest additional expense will be for car buyers who trade in their old car.

Illinois currently only taxes trade-ins worth more than $20,000, so the tax on a new $35,000 car would be about $1,300. But in 2020, the state will tax the value of any trade-in worth more than $10,000, making the sales tax $2,185.

"It's an unfair tax. It's not right to tax both when they buy something and when they sell it and that's what this is doing," said Austin Berg, from the Illinois Policy Institute.

The tax was part of the Gov. JB Pritzker's $45 billion "Rebuild Illinois" infrastructure plan. Car dealers lobbied against the tax in Springfield and are hoping to get it repealed next year.

But in the meantime, they say now is the time to buy, before the new taxes take effect.

"It's truly a savings. If you have a trade in worth $25,000, it would cost an extra $1,400. It's real money," said Bill Haggerty, of the Chicago Auto Trade Association.

Aside from the trade-in tax, it will also cost more to register your car, to buy gas, or even to park it in Illinois - in all, nearly $2 billion.
Copyright © 2022 WLS-TV. All Rights Reserved.