Effective January 1, 2022, retail vehicle buyers can now receive the full tax credits on any car they want to trade-in! A car trade in tax credit is a tax credit you benefit from when trading-in your used car and purchasing a new one. This update is part of the Senate Bill 58 that is supported by the Chicago Automobile Trade Association (CATA) and Illinois Automobile Dealers Association. The new update reverses the $10,000 cap that was set in 2020 as part of Governor Pritzkers Rebuild Illinois capital infrastructure plan.
Illinois Removes Trade-In Value From Selling Price Definition
The amendment that was made to the Illinois Trade-in tax credit changed what the definition of “selling price” meant for vehicles sold in Illinois. As a result, the “selling price” in Illinois will no longer include the following:
- The portion of the value or credit for traded-in vehicles that exceeds $10,000
- The value or credit given for traded-in vehicles
So, if you’re in the market for a new car and you’re searching for a new Chevrolet Malibu, GMC Yukon, or maybe a brand new work truck like the all-new Chevy Silverado for sale and you’re looking to trade in your old car, this new statute will require the full value of all trade-ins to be excluded from the tax for retail sales. You are guaranteed to make more money with your trade-in!
Full Trade-In Tax Credit is Back
This change means you’ll have the ability to save thousands on your trade-in. Before 2022, any trade in that exceeded $10,000 was capped and you couldn’t earn more on your trade-in. Now that this was reversed you can get more money for your trade-in and you’ll save more on the new vehicle you pick. In addition, car-buyers can use the full-trade-in amount when calculating the overall Illinois sales tax that is due at the time of sale.
Illinois Trade-In Tax Credit of 2022: How it Works
In 2021, if you purchased a vehicle for $40,000 and your trade in value for your old vehicle was $25,000 you would only get a $10,000 tax credit due to the cap that was taken into effect at the time. As a result, the taxes paid in 2021 would equal $3,062.50.
In 2022, you’ll save a lot more with the new Illinois Trade-In Tax Credit. Taking the same scenario in the previous year, if you purchase a vehicle for $40,000 and your old vehicle’s trade in value is $25,000 you’ll receive a tax credit on the entire trade in amount of $25,000. As a result, you’ll only pay $1,312.50. When compared to the previous year, the difference in total saved is $1,750.
Value Your Trade In & Get The Full Tax Credit Back
For drivers looking to trade in their car and get the biggest bank for their buck, now is the time! Trading in your car at an Illinois dealership like Castle Chevrolet of Villa Park, Castle Buick-GMB of North Riverside, IL, Castle Volkswagen of Schaumburg, or Castle Chevrolet North of Elk Grove Village is safer and you know you’ll be taken care of by our team. Car buyers don’t need to do anything to receive the full tax credit, it will automatically be added in at the time of purchase. Even if you’re not sure what the value of your vehicle may be or you don’t know what model you’re looking for we can help get you the best car deal.