How car sales tax works in Illinois
An Illinois dealer charges the 6.25% state rate plus any local taxes where the dealer is located. Local rates vary a lot from place to place, so the Department of Revenue points buyers and businesses to its Tax Rate Finder rather than a single list.
The tax applies to the price after your trade-in, and since January 1, 2022 there's no limit on that credit. For two years, 2020 and 2021, the credit for passenger vehicles was capped at $10,000; Public Act 102-0353 removed the cap. Manufacturer rebates, on the other hand, don't reduce the tax: a rebate applied to the price still counts as taxable receipts.
Worked example
The 2% local rate here is just an example. Look up the real rate for the dealer's address and enter it in the calculator.
Illinois rules to know
- Full trade-in credit. The whole trade-in value comes off the taxable price; the old $10,000 cap ended on January 1, 2022.
- Local taxes vary. Use the Tax Rate Finder for the dealer's location.
- Rebates are taxed. A manufacturer rebate applied to the price doesn't lower the tax.
- Fees are separate. Secretary of State title and registration fees aren't included.
Financing tips for Illinois buyers
A larger trade-in now saves tax on the full amount, which can make trading in more attractive than selling privately. Compare the trade-in offer with a private sale price minus the tax you'd save, and compare loan terms in the main car loan calculator. To see how the payment fits your pay, try the Illinois paycheck calculator.
Trade-in or private sale in Illinois?
With the trade-in cap gone since 2022, the whole trade-in value saves tax at 6.25% plus your local rate. On a $10,000 trade-in with a 2% local rate, that's $825; on a $20,000 trade-in, $1,650. A private sale has to beat the dealer's offer by more than that to leave you better off.
Rebates are the other way round: a manufacturer rebate applied to the price is still taxed, so a $1,000 rebate saves you $1,000 on the price but nothing on the tax. Compare offers on the price before rebates, then subtract the rebate from what you'll finance.