Purchasing a vehicle is a significant investment, and understanding the associated taxes is crucial, especially when buying from out-of-state dealers. If you are an Illinois resident considering buying a car from a different state, it’s essential to be aware of the State Of Illinois Vehicle Sales Tax regulations. This guide clarifies how Illinois sales tax applies to out-of-state vehicle purchases, ensuring you are fully informed and prepared.
When you buy a vehicle from an out-of-state dealer and reside in Illinois, you might be required to pay Illinois sales tax, even if you’ve already paid sales tax in the state where you purchased the car. This is because Illinois requires residents to pay sales tax based on the Illinois rate. If the sales tax rate in the state where you bought the vehicle is lower than Illinois’s, you will need to pay the difference to the Illinois Department of Revenue.
Currently, Illinois has a state sales tax rate of 6.25%. If you purchase a vehicle in a state with a lower sales tax rate, such as Missouri, which has a state sales tax of 4.225%, you will owe the difference to Illinois. This difference is 2.025% in state sales tax alone. It’s important to note that local sales taxes can further increase this difference.
For instance, consider purchasing a $20,000 vehicle in Missouri and registering it in Cook County, Illinois. Cook County has an additional local sales tax of 1%. Therefore, the total sales tax difference you would owe to Illinois is calculated as follows:
- Illinois State Sales Tax: 6.25%
- Cook County Local Sales Tax: 1%
- Total Illinois Sales Tax (Cook County): 7.25%
- Missouri State Sales Tax: 4.225%
- Total Additional Tax Owed: 7.25% – 4.225% = 3.025%
On a $20,000 vehicle, this 3.025% difference amounts to an additional $605 in tax due to Illinois.
Sales tax rates can vary across Illinois counties. Here are a few examples to keep in mind:
- DuPage, Kane, Lake, McHenry, and Will Counties: Use a combined sales tax rate of 7% for calculation purposes.
- Madison and St. Clair Counties: Generally use 6.5%, but this can be 6.25% outside the Metro East Transit District.
These additional state of illinois vehicle sales taxes are payable when you register your vehicle in Illinois with the Secretary of State. You will need to complete and submit Illinois tax form RUT-25, “Vehicle Use Tax Return for Out-of-State Purchases.” This form and the payment are due within 30 days after bringing the vehicle into Illinois. You can find this form on the Illinois Department of Revenue website.
It’s worth noting that some states do not have vehicle sales taxes, such as Alaska, Delaware, Montana, New Hampshire, and Oregon. Comparatively, Illinois’s vehicle sales tax is in the higher range nationally, with only a few states having higher rates, like California at 7.5%.
Private Party Vehicle Purchases and Use Tax
The above information pertains to vehicles purchased from out-of-state dealerships. If you buy a vehicle from an individual, or receive it as a gift or transfer, the tax obligations are slightly different. In these cases, you will pay a Private Party Vehicle Use Tax instead of the sales tax difference.
For private party purchases, gifts, or transfers, you must use form RUT-50, “Vehicle Use Tax Transaction Return.” Instead of paying the difference in sales tax, you will pay 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,” available on the Illinois Department of Revenue website and form RUT-5.
Similar to out-of-state dealer purchases, your local municipality and county may also impose additional taxes on private party vehicle transactions. The RUT-50 form is also due no later than 30 days after the vehicle purchase date.
Understanding the state of illinois vehicle sales tax is crucial for anyone buying a vehicle out of state. Whether you are purchasing from a dealer or a private individual, being informed about your tax responsibilities ensures a smooth vehicle registration process in Illinois and helps you avoid unexpected costs. Always refer to the official Illinois Department of Revenue website for the most current information and forms related to vehicle sales tax.
