ROCKFORD, Ill. (WTVO) — If you’re planning to buy a new car soon, now may be the time to trade in your old ride.
After the new year, the State of Illinois will change how vehicles are taxed.
Ricky Stout, General Manager at Anderson Toyota, says, “There are people getting on the bandwagon that are going to take advantage of the savings.”
Currently, Illinois residents are not taxed on a car’s “trade-in” value. But, starting January 1st, anyone who trades in a car valued at least $10,000 will have to pay a new tax.
Stout explains, “If you had a $60,000 car you were purchasing, with a $40,000 trade-in [vehicle], you would only pay the tax on the difference. So, you’d be paying tax on $20,000. After January 1st, you would pay tax on everything [over] $10,000.”
In Stout’s example, the buyer would pay about $1,800 in state sales taxes if they waited until 2020 to make that transaction.
Wanting to save extra money, Stout says people are rushing on to his auto lot to buy a new car.
“We are seeing people come, and they have a little urgency because of the tax law they know is coming,” he said. “Of course, we see people rolling their eyes, saying ‘oh, another tax hike.’ Or, in this case, it’s not necessarily a tax hike, but it’s a tax benefit that is lessening, substantially.”
Republican State Representative John Cabello voted against the tax.
“It was part of the 21 new or increased taxes that the lawmakers who voted for it enacted upon the taxpayers,” he said. “We are taxed way too much already, and I didn’t feel that we should continue that, so I voted ‘no.'”
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