Illinois vehicle sales tax starts at a 6.25% state rate when you buy from a dealer, with local taxes pushing the combined rate to roughly 7.25% in most of the state and as high as about 10.25% in the city of Chicago. Buying from a private party works differently: instead of a percentage, you pay a flat dollar amount set by the vehicle’s age or price. What you actually owe depends on who you buy from, what you pay, and whether any exemptions apply.
What You Pay When Buying From a Dealer
Illinois charges the 6.25% Retailers’ Occupation Tax on the gross selling price of a car, truck, van, motorcycle, or ATV bought from a licensed dealer.1Justia Law. Illinois Code 35 ILCS 120 – Retailers Occupation Tax Act That 6.25% is only the state’s share. County, municipal, and regional transportation taxes stack on top, and the combined rate is tied to the address where the vehicle will be titled.
Typical combined rates look like this:
- City of Chicago: roughly 9.5% to 10.25%
- Suburban Cook County: around 8.25%
- Most of the rest of Illinois: around 7.25%
Your dealer calculates the exact total, collects it at closing, and remits it to the Illinois Department of Revenue on Form ST-556.2Illinois Department of Revenue. Illinois Tax Requirements for Cars, Trucks, Vans, Motorcycles, ATVs, Trailers, and Mobile Homes You don’t file anything separately.
What You Pay in a Private Party Sale
Buying from another person triggers the Private Party Vehicle Use Tax instead of the standard sales tax. The amount comes from one of two lookup tables, and the result is almost always lower than what a dealer purchase would cost.
Vehicles Under $15,000 — Taxed by Age
If the purchase price or fair market value (whichever is higher) is under $15,000, the tax is set by the vehicle’s age:3Illinois Department of Revenue. Private Party Vehicle Use Tax Chart for 2026
- 1 year old or newer: $465
- 2 years: $365
- 3 years: $290
- 4 years: $240
- 5 years: $190
- 6 years: $165
- 7 years: $155
- 8 years: $140
- 9 years: $125
- 10 years: $115
- 11 years or older: $100
Vehicles at $15,000 or More — Taxed by Price
At $15,000 and up, price brackets take over:3Illinois Department of Revenue. Private Party Vehicle Use Tax Chart for 2026
- $15,000 to $19,999.99: $850
- $20,000 to $24,999.99: $1,100
- $25,000 to $29,999.99: $1,350
- $30,000 to $49,999.99: $1,600
- $50,000 to $99,999.99: $2,600
- $100,000 to $999,999.99: $5,100
- $1,000,000 or more: $10,100
The gap with dealer tax grows at higher prices. A $30,000 vehicle bought from a dealer owes $1,875 in state tax alone; the same vehicle bought from a private party owes $1,600 total. At $60,000, it’s $3,750 versus $2,600.
Private party motorcycles and ATVs get a much better deal: a flat $25, regardless of age or price.4Illinois Department of Revenue. RUT-50 Instructions for Private Party Vehicle Use Tax Transaction Return
What Can Raise or Lower the Taxable Amount
Trade-Ins
Trading in a vehicle at a dealer reduces the amount you pay tax on, with no cap. Buy a $45,000 car with a $20,000 trade-in and you owe tax on $25,000. At the 6.25% state rate, that’s $1,562.50 instead of $2,812.50.
Trade-ins do not reduce private party tax. The flat tables apply to the full purchase price or fair market value, with no deduction for anything you hand over as part of the deal.5Illinois Department of Revenue. Vehicle Tax FAQs
Rebates and Discounts
A manufacturer’s rebate does not reduce the taxable price, because the manufacturer reimburses the dealer. A $2,000 rebate on a $40,000 car still leaves you owing tax on the full $40,000.5Illinois Department of Revenue. Vehicle Tax FAQs A dealer discount funded by the dealer itself does reduce the taxable amount.
Documentation Fees
Illinois caps dealer documentation fees at $300, with annual CPI adjustments.6Illinois General Assembly. Illinois Code 815 ILCS 375/11.1 A doc fee that is separately itemized on the sales agreement generally isn’t part of the taxable selling price. One bundled into the vehicle price without being broken out becomes taxable.
Fair Market Value in Private Sales
For private party deals, tax is based on the purchase price or fair market value, whichever is higher. Buy a car from a friend for $5,000 when it’s worth $12,000 and you owe tax on $12,000. If there’s no stated price, such as a gift or an even trade, the full fair market value applies, and a licensed dealer can provide a valuation if you need documentation.4Illinois Department of Revenue. RUT-50 Instructions for Private Party Vehicle Use Tax Transaction Return
Family Transfers and the $15 Rate
A vehicle transferred between immediate family members is taxed at a flat $15. Qualifying relationships are spouse (including civil union partners), parent, child (including adopted children), brother, and sister. Step-relations, in-laws, and grandparent-to-grandchild transfers do not qualify.4Illinois Department of Revenue. RUT-50 Instructions for Private Party Vehicle Use Tax Transaction Return Giving a car to a grandchild triggers the normal use tax based on fair market value.
Out-of-State Purchases and Moving to Illinois
If you buy from a dealer in another state, Illinois credits whatever sales tax that state collected and charges you the difference. Pay 4% in another state on a $30,000 vehicle ($1,200), and Illinois assesses its 6.25% rate ($1,875) and bills you the $675 gap.2Illinois Department of Revenue. Illinois Tax Requirements for Cars, Trucks, Vans, Motorcycles, ATVs, Trailers, and Mobile Homes If the other state’s rate matched or exceeded Illinois’s, you owe nothing extra. Report it on Form RUT-25 within 30 days.
If you’re moving to Illinois with a vehicle you already own, no tax is due as long as the vehicle was titled and used outside Illinois for at least three months. You still file Form RUT-25 and surrender your out-of-state title, but you can claim a full exemption.7Illinois Department of Revenue. RUT-25, Vehicle Use Tax Transaction Return Instructions Owned it for less than three months? You owe the use tax. Businesses moving into Illinois can’t claim the three-month exemption regardless of how long the vehicle was used elsewhere.
How and When to Pay
For dealer purchases, the dealer handles everything at closing on Form ST-556.
For private party purchases, the responsibility is yours. Complete Form RUT-50 and submit it with payment to the Secretary of State’s office when you apply for title and registration. The deadline is 30 days from the purchase date, or from the date you brought the vehicle into Illinois.4Illinois Department of Revenue. RUT-50 Instructions for Private Party Vehicle Use Tax Transaction Return Forms are available at Secretary of State facilities and currency exchanges.8Illinois Department of Revenue. RUT-25, RUT-25-LSE, and RUT-50
Penalties for Paying Late
Missing the 30-day window costs real money. Illinois applies late-payment penalties on a sliding scale:9Illinois Department of Revenue. Penalties and Interest for Illinois Taxes
- 1 to 30 days late: 2% of the tax due
- 31 or more days late: 10% of the tax due
- After an audit begins: 15% of the unpaid amount
- After an audit-prepared amended return is issued: 20% if not paid within 30 days
Interest accrues starting the day after the payment was due, at a rate tied to the federal underpayment rate that adjusts every six months. A separate late-filing penalty can apply if you ignore a nonfiling notice: the greater of $250 or 2% of the tax shown due.9Illinois Department of Revenue. Penalties and Interest for Illinois Taxes
Illinois does allow penalty abatement for reasonable cause if you exercised ordinary business care and made a good-faith effort to file and pay on time. Qualifying circumstances include serious illness, destruction of records by fire or casualty, and reliance on erroneous information from the Department of Revenue itself. A planned vacation or simple forgetfulness won’t qualify.