How the Illinois Sales Tax is Calculated The foundation of the Illinois sales tax on cars is the ad valorem principle, which means the tax is based on the vehicle's value rather than a fixed amount. Sales Tax It is important to distinguish between the sales tax and the registration fees when buying a car in Illinois.
Illinois Car Sales Tax Rate Breakdown: Understanding the Ad Valorem Principle
If you are purchasing a new or used car and trading in an older vehicle, the value of the trade-in is subtracted from the purchase price before the tax is calculated. During this process, the state verifies the sales tax payment and issues the official registration, which is required to drive legally in Illinois.
Understanding these exceptions can help you avoid unexpected costs. New residents must pay the sales tax to the dealer at the time of purchase and then register the vehicle to obtain license plates.
Illinois Car Sales Tax Rate Breakdown: Understanding the Ad Valorem Principle
Title and Registration Process After the sales tax is collected, the dealer or seller provides a certificate of title that reflects the transaction. Understanding the specifics of the Illinois sales tax on cars is essential for budgeting and compliance.
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