Buying a car, especially from out of state, can bring up questions about sales tax. If you’re an Illinois resident purchasing a vehicle from a dealer in another state or through a private sale, it’s crucial to understand your Illinois Vehicle Sales Tax obligations. This guide clarifies how Illinois sales tax applies to vehicle purchases, ensuring you’re informed and prepared when registering your new car.
Illinois Sales Tax on Out-of-State Vehicle Purchases
One common question is whether you owe Illinois sales tax if you buy a car in another state and already paid sales tax there. The answer is potentially yes. Illinois requires residents to pay the difference if the sales tax rate in the state where you purchased the vehicle is lower than Illinois’ rate.
Currently, Illinois has a state sales tax of 6.25%. If you buy a vehicle in a state with a lower sales tax, such as Missouri with its 4.225% state sales tax, you will need to pay the difference to Illinois. This difference is calculated based on the state sales tax and any applicable local sales taxes in Illinois where you will register the vehicle.
For instance, consider purchasing a $20,000 vehicle in Missouri and registering it in Cook County, Illinois. Cook County has a local sales tax of 1%. The total sales tax difference you would owe to Illinois is calculated as follows:
- Illinois total sales tax (State + Cook County): 6.25% + 1% = 7.25%
- Missouri state sales tax: 4.225%
- Difference: 7.25% – 4.225% = 3.025%
- Additional tax owed on $20,000 vehicle: 3.025% of $20,000 = $605
It’s important to note that local sales tax rates vary across Illinois counties. Here are a few examples:
- DuPage, Kane, Lake, McHenry, and Will Counties: Use 7% as the combined state and local sales tax rate for calculation purposes.
- Madison and St. Clair Counties: Use 6.5%, except outside the Metro East Transit District, where 6.25% applies.
These additional Illinois vehicle sales taxes are payable when you register your vehicle with the Illinois Secretary of State. You will need to complete and submit form RUT-25, Vehicle Use Tax Return for Out-of-State Transactions. This form and payment are due within 30 days of bringing the vehicle into Illinois.
While most states have vehicle sales taxes, some states like Alaska, Delaware, Montana, New Hampshire, and Oregon do not. Interestingly, only a few states have higher vehicle sales taxes than Illinois, with California being one example at 7.5%.
Illinois Private Party Vehicle Use Tax
The rules differ slightly when you purchase a vehicle from a private individual rather than a dealership, or if you receive a vehicle as a gift or transfer. In these situations, you are subject to Private Party Vehicle Use Tax in Illinois.
Instead of paying the difference in sales tax, this tax is a fixed amount based on the vehicle’s purchase price or fair market value. The specific amounts are detailed in the Private Party Vehicle Use Tax Chart. Additionally, your local municipality and county might impose further taxes.
To pay this tax, you must complete form RUT-50, Vehicle Use Tax Return for Private Party Purchase. Form RUT-50 and payment are due no later than 30 days after the vehicle purchase date.
Conclusion
Navigating Illinois vehicle sales tax is essential whether you’re buying from an out-of-state dealer or a private party. Understanding these regulations ensures compliance and avoids unexpected costs when registering your vehicle in Illinois. Remember to utilize forms RUT-25 and RUT-50 as applicable and be aware of the deadlines to fulfill your Illinois vehicle sales tax obligations correctly.
