Are you thinking about buying a used car in Illinois? Sales taxes and other fees can increase your out-of-pocket expenses well above the purchase price. We give you the lowdown on Illinois vehicle sales taxes to help you avoid any surprises.
The rate for used car sales tax in the state of Illinois is 6.25% of a vehicle’s purchase price. Depending on where you live in Illinois, you may be subject to additional city or county taxes as well. For example, county sales taxes on a vehicle purchase range from 0.25 to 0.75%. The average combined state and local sales tax on vehicle purchases in Illinois is 8.15%.
Keep reading to get the scoop on used car sales taxes in the state of Illinois.
Do You Pay Taxes When You Buy a Car From a Private Seller in Illinois?
When you buy a car and register it in Illinois, you owe sales tax—whether you purchase it from a dealer or a private seller. The tax law does not make a distinction for private-party vehicle sales.
The statewide sales tax on vehicles in Illinois currently stands at 6.25% of the purchase price of the car. For example, if you buy a used car from a private party for $10,000, you’ll pay $625 in sales tax plus local (city and county) tax, depending on where you live in the state.
The total vehicle sales tax in Illinois is at its highest at 11.5% in such towns as Harvey, Harwood Heights, and Matteson. If you’re thinking about buying a car in Chicago, you’ll have to pay the state tax (6.25%), local taxes (3% in city and county rates), and an additional 1% in special district tax for a total of 10.25%.
You’ll find the lowest sales tax rates in cities like Robinson and Momence, which don’t levy local tax, and whose citizens pay the 6.25% state tax rate only.
Here is a table of total car sales tax rates for the ten largest cities in Illinois:
Additional Fees in Illinois
No matter where you purchase your vehicle—from a private seller or a dealer—you owe additional taxes for:
- Registration fee: $151
- Plate transfer fee: $25
- Title fee: $150
Check the official Illinois Department of Revenue (IDOR) website for further information on sales tax responsibilities.
How is Used Car Sales Tax Calculated in Illinois?
Sales taxes are assessed as a percentage of the vehicle’s purchase price. If you think you can outsmart the state by negotiating a low “official” purchase price and paying the remainder in a side transaction, think again. The Illinois Department of Motor Vehicles is way ahead of you.
Understanding Fair Market Value
The Illinois Department of Motor Vehicles has the option of using the car's "fair market value" (not the car price) as the basis for calculating sales tax. The DMV establishes what the car is worth on the open market by referring to the Kelley Blue Book or other reliable sources of information about used car prices. If the DMV concludes that the car's fair market value is greater than the purchase price, the sales tax can be assessed based on the fair market value.
If you’re buying the car from a private party, you should declare the car's fair market value to the DMV and pay the appropriate amount of sales tax based on that value. Failing to do so may result in fines and penalties.
Is the Sales Tax the Same as Use Tax?
In Illinois, “sales tax” and “use tax” both refer to a tax paid on the purchase of a product or service. Are they exactly the same thing? The official website is about as clear as mud on the issue. If you’ve recently purchased a used car in Illinois, you owe sales tax—or use tax—to the DMV when you register it. Call it what you will; you’ll be paying the state’s 6.25% plus any applicable local taxes in any case.
The rate for private party vehicle use tax is determined by the car's fair market value or the purchase price. Where the stated price is not available (as in the case of a gift), the Illinois DMV will calculate the use tax rate based on the fair market value. If the vehicle’s price is less than $15,000, the tax is based on the age of the vehicle. If the vehicle purchase price is $15,000 or more, the tax is based on the purchase price.
How to Avoid Paying Sales Tax on a Car in Illinois?
Sorry to break it to you, but unless you qualify for an exemption, there is no way to legally avoid paying sales tax on used cars in Illinois or in any other state where sales tax is levied.
Who is Exempt From Paying Taxes in IL?
You can avoid paying sales tax if your vehicle purchase falls into any of the following categories:
- You are a member of a tax-exempt organization. To be exempt from state and municipal sales taxes, a business must be non-profit and operated exclusively for charitable, religious, educational, or governmental reasons. The organization must submit their request and complete the Application for Tax Sales Exemption Form (STAX-1).
- Federal, state, and local governments are exempt from paying sales tax when buying motor vehicles. They must provide the dealer with a purchase order or letter of authorisation on official letterhead at the time of purchase.
- The vehicle was designed for use on farms and is mostly utilized for agricultural output.
- The buyer relocated to Illinois from another state, and the vehicle was driven in another state for at least three months.
- If someone buys a car in Illinois, immediately moves to another state, and registers the car in their new state, they will not pay Illinois sales tax. If their new state of residence charges sales tax, they will pay it per that state’s tax rate.
- The car was a gift from an estate to the surviving spouse.
- The buyer is not an Illinois resident and will register the car in a different state and pay sales tax as per that state’s tax, if applicable.
The state of Illinois will expect appropriate documentation to substantiate any qualifying tax exemptions, so have your paperwork in order when you go to register your vehicle and transfer the title.
Moving to a State With No Vehicle Sales Tax
Moving to a state with no sales tax is the best way to avoid paying taxes on used cars. Alaska, New Hampshire, Oregon, Delaware, and Montana do not charge sales taxes on vehicle purchases.
If you plan to move to one of these states, you should postpone purchasing a car until after the move. Otherwise, we don't recommend attempting to avoid paying car sales tax in Illinois or anywhere else. The thousands of dollars you might save are not worth the legal and financial implications, nor the loss of your peace of mind.
How to Pay Illinois Vehicle Sales Tax
Here's how to pay car sales tax in Illinois after you’ve purchased a used car from a private seller:
- You and the seller each complete the Vehicle/Vessel Bill of Sale. When you buy the car on PrivateAuto, we provide an official Washington bill of sale and prompt both of you to sign it in our app at the appropriate stage of the transaction process.
- Calculate the amount of sales tax due depending on the tax rate for your city and county. The Illinois sales tax rate on cars is 6.25 percent. To figure out how much the sales tax is, multiply the price of the car by 0.0625, but if you’re subject to local sales tax, add the local rate (divided by 100) to this number before multiplying the price of the car by it. Or just use our sales tax calculator to make things easier.
- Complete the Sales Tax Transaction Return (Form ST-556) for the motor vehicle that must be titled and registered by an agency of the Illinois state government.
- Bring the completed form, along with the computed sales tax amount, to the county tax office.
- Pay the sales tax and any other fees that apply, such as title and registration fees.
- Get a receipt for your payment.
- If applicable, the county tax office will process your payment and provide your registration and license plates.
- Once you've paid the sales tax and turned in the necessary paperwork, you'll get your new registration and title for the car. The title and registration will show that you bought the car and that the sales tax has been paid. You will also get new license plates.
Many people think buying from car dealers is much easier than preparing all the paperwork yourself. It’s true that dealers are awfully convenient at handling the paperwork, but you pay way more when you go to a dealer.
What’s more, dealerships charge a "documentation fee" above and beyond the taxes you pay to the state. The documentation fee in Illinois goes as high as $300.
Avoid documentation fees and get lower prices when you buy used cars from private sellers right here on PrivateAuto.
Buy and Sell Used Cars on PrivateAuto
Conduct private car transactions easily and safely with PrivateAuto. Our innovative platform connects buyers and sellers and gives them all the tools to complete the deal, from in-app financing to secure messaging to integrated payments.
PrivateAuto allows you to negotiate the price you want, schedule the test drive meetup, and pay for the car—all within our app without compromising your personal information.
Whether you want to shop used cars for sale or are trying to sell your car for top dollar, PrivateAuto will help you get the deal done.
Get started with PrivateAuto today.
Here’s how you can sell your car in Illinois with a few simple steps.
- Gather necessary documentation
You’ll need your vehicle title and other documentation. Have all the paperwork you need, so you’re not scrambling to find it at the moment of completing a sale.
2. Register on PrivateAuto and get verified
To make PrivateAuto a safe place for everyone, we require email, phone, and driver’s license verification, including facial recognition.
3. List your car
Easily create your PrivateAuto listing with our step-by-step guide. Bonus: we include a window brochure with a QR code scannable to your listing.
4. Set your terms
It’s your car, so you drive the deal! You can control where, when, and who you meet. Decide whether to accept only ID-verified buyers, or buyers with verified funds. Don’t waste your time with buyers who aren’t verified to your preference.
5. Vet incoming offers
Manage offers in one place with the ability to accept, reject, or counter offers within the app. Listing on multiple sites? Filter all communications through PrivateAuto by sharing your listing link on all platforms. Your personal info is protected: no more giving out your phone number or email address. All communication happens in our app.
6. Choose a buyer
When you find an offer you like, accept it and proceed to the next step with that buyer.
7. Schedule a meeting
The buyer will want to look at your car. No more back and forth texts. You never have to give out your phone number. Rather, use our handy scheduling feature to schedule test driving and coordinate a time and place for meeting. (Oh, and you’ll be able to finalize the transaction instantly at the first meeting, FYI.)
8. E-sign documents
After the buyer is satisfied with your car and the two of you have agreed on a purchase price, you can easily e-sign the bill of sale within our app, from your phone. With our shared documents feature, you can easily locate the paperwork needed after the sale.
9. Get paid, instantly
Before PrivateAuto, receiving funds was the most stressful part of the entire selling process, especially for any used car sale over $5,000. There just aren’t a lot of good ways to move large amounts of money quickly and conveniently. Those days are over! Verify and receive funds instantaneously with PrivateAuto Pay, our innovative banking integration. Guaranteed funds for transactions large and small.
10. Transfer title
When you sell your vehicle, fill out the necessary information on the back of the Certificate of Title and sign in order to transfer ownership of the vehicle to the new owner.
Illinois Used Car Sales Tax FAQ
How much are taxes for titles and fees on a used car in Illinois?
Here are some additional expenses you may face when buying a car in Illinois:
- Registration fee: $150
- Illinois title transfer fee: $155
- License plates fee: $101 ($108 for personalized plate renewal sticker)
- Gift tax, if applicable: $15
Who pays sales tax on a used car in Illinois?
The buyer pays the sales tax when they purchase a car from a private party in Illinois. The tax rate is based on the purchase price or fair market value of the car.
How much does it cost to transfer a title in Illinois?
The title fee in the state of Illinois is $155 for an original title. A duplicate or corrected title will cost you $50. Non-residents have 30 days to transfer their title, and people who buy or inherit a car have 20 days to register it.
Do both parties need to be present to transfer a title in Illinois?
Both parties need to be present for signing over a car title in a private transaction. The seller and buyer each need to fill out and sign the physical Certificate of Title. The seller is not required to be present when the buyer finalizes the title transfer with the DMV.
Can I register an out-of-state vehicle in Illinois?
You can register an out-of-state vehicle in Illinois if you’re a resident of Illinois or are moving to Illinois and establishing residency there. Bring your vehicle’s title to the Illinois Department of Motor Vehicles, along with:
- Application for Car Transactions (VSD 190)
- ID and proof of residency
- Vehicle title tax form (if applicable)
After you’ve paid the title registration cost and any additional fees, you will have successfully registered the vehicle you bought or used in a different state.
You can also mail the documentation and fees to:
Secretary of State
Vehicle Services Department
501 S. 2nd St, RM 014
Springfield, IL 62756
Why is vehicle registration in Illinois so expensive?
Drivers in Illinois pay the highest base rate and the sixth-highest overall fee for vehicle registration in the US. In 2019, new infrastructure legislation increased fees and tax rates on motor vehicles, including gas taxes.
From January 1, 2019, instead of $98, Illinois drivers have to pay $150 in registration fees for a standard vehicle weighing 8,000 lbs or less. Electronic car registration went from $35 every two years to $248 per year. Motorcycle owners can relax, though. The $38 registration fee for motorcycles hasn’t changed.
Can I drive in Illinois with a foreign license?
You may use your valid driver’s license from another state or foreign country to temporarily drive in the state of Illinois during your stay. If you plan to move to Illinois and become a resident, you need to register your vehicle in the state of Illinois.
What is the Illinois Lemon Law for used cars?
The Illinois Lemon Law does not cover used cars bought from private parties. You might be eligible for a refund if you’ve bought a “lemon” vehicle from a dealership.
Which state has the cheapest car tax?
Each state in the US has its own taxes and fees for purchasing a car. Some states offer tax exemptions for certain types of motor vehicles.
States such as Oklahoma, North Carolina, Colorado, and Alabama charge less than 3.5% in sales taxes on used cars.
Alaska, Delaware, Montana, New Hampshire, and Oregon don’t charge sales tax when you purchase a motor vehicle. So, if you really want to avoid car sales tax, you might consider moving to one of these states.
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