If you’ve been considering trading in your car for something newer and better, now is the time to do so. A new trade-in tax law will be implemented starting January 1, 2020. This law essentially eliminates the tax benefit of trading in your vehicle, so you’ll want to visit our used car dealer in West Chicago before the new year if you’re planning on trading in. Here’s what you should know about the new law.
What It Means
Currently, the state of Illinois does not collect sales tax on your car’s trade-in value. So, as of now, when you trade in your vehicle, this old car will act as an untaxed credit toward the purchase of your new vehicle. It’s ideal to start the trade-in process as early as possible, especially with a ticking clock!
Here’s a real-life example to help you better understand. As of now, if you are trading in a vehicle that is valued at $38,000 for a vehicle valued at $65,000, you will only be taxed on the difference in prices. However, when the new year starts, you’ll only receive a trade-in credit of $10,000 instead of the value, making the taxable amount on your trade-in $28,000. In addition to this, you will be paying tax on the cost of your trade-in, making the taxable amount skyrocket to $55,000.
Don’t Wait Any Longer
The new year is right around the corner! Don’t wait another day to trade in your vehicle at the best possible price.