HERRIN (WSIL) — Those who regularly trade-in their vehicles every couple of years, may want to trade them in before the year is up.
Senate Bill 690, signed by Governor JB Pritzker last summer, will impose a 6.25% trade-in tax on vehicles in Illinois beginning January 1, 2020.
The new tax will affect trade-in vehicles that are worth more than $10,000. That means it could cost at least $625 extra to trade in your vehicle, not including the local sales tax.
Luke Munsell, a sales consultant at Auffenberg in Herrin, says customers have come into the building to file complaints against the trade-in tax so that the dealership can forward those concerns to the governor’s desk.
"People feel like they’re getting double-taxed. They’re getting taxed on the vehicle they buy and then they’re getting taxed when they trade it," Munsell said. "They feel it’s a double taxation and they feel like it’s completely unfair."
The law is projected to generate around $60 million in revenue in 2020, which will be used for vertical infrastructure.
"I feel like the taxes we get on the vehicle purchase and everything should go back into the system where vehicles are being affected," Munsell said.
Down the street at Elite Auto Sales, owner Steve James says he’s ready to adjust to the new law by adjusting his inventory.
"We’re going to stay around $20,000 and under. There will be exceptions but we’re not going to have ten $40,000 diesel fuel trucks or anything like that anymore," James said.
He expects a short impact on sales because he’s shifting his focus to more affordable vehicles.
"You’re going to have to sell them less," James said. "Nobody wants to pay it, of course, but that’s the way the law is going to be."
Munsell says Auffenberg is trying to figure out ways to help customers save money.
"We’re looking to get more economical vehicles. So even if they’re paying more in tax, they can save over the lifetime of the vehicle with less in gas price," Munsell said.
Those looking to trade-in their vehicles in neighboring states won’t have much luck. Illinois residents will still have to pay the trade-in tax no matter which state they trade their vehicle in.