Illinois car sales tax starts at a 6.25% state rate on dealership purchases, with local add-ons pushing the combined rate above 10% in some areas. Private party sales work differently: they use a flat tax based on the vehicle’s age or price, and the amount often comes out well below what you’d pay through a dealer. Either way, you’ll also owe a $165 title fee and $151 for annual registration, and any tax due on a private sale must be filed within 30 days.
Dealership Purchases: 6.25% Plus Local Taxes
Buying a new or used vehicle from a licensed Illinois dealer triggers the state sales tax rate of 6.25%.1Illinois Department of Revenue. What Are the Retailers’ Occupation and Use Tax Rates in Illinois That’s the floor. Counties, municipalities, and special taxing districts stack additional taxes on top, and the combined rate depends on where you register the vehicle, not where you buy it. Chicago residents face a combined rate around 10.25%, and some areas with overlapping local taxing authorities run higher still.
Before you sign anything, check the combined rate for your registration address. The Illinois Department of Revenue’s tax rate finder returns the exact percentage for any address in the state.
Trade-Ins Cut the Taxable Amount
If you trade a vehicle in at a dealership, sales tax applies only to the difference between the new car’s price and the trade-in value. A $35,000 car with a $12,000 trade-in leaves you paying tax on $23,000.2Illinois Department of Revenue. Vehicle Tax FAQs The trade doesn’t have to be your own vehicle either. A third party can assign their car to the dealer and give written authorization for the credit to be applied to your purchase.
At a 9% combined rate, a $12,000 trade-in saves you $1,080 in tax. That credit is only available at dealerships. Private party transactions don’t get it, which is worth weighing if you’re deciding whether to sell your old car yourself or trade it in.
Private Party Sales Use a Flat Tax
Buying a car from another person is taxed under the Private Party Vehicle Use Tax, reported on Form RUT-50.3Illinois Department of Revenue. Private Party Vehicle Use Tax Instead of a percentage, you owe a flat dollar amount pulled from one of two tables, chosen based on the vehicle’s price.
Vehicles Under $15,000 (Table A)
When the purchase price or fair market value is less than $15,000, the tax is set by the vehicle’s age. For 2026:4Illinois Department of Revenue. RUT-5, Private Party Vehicle Use Tax Chart for 2026
- 2025 or newer (1 year or less): $465
- 2024 (2 years): $365
- 2023 (3 years): $290
- 2022 (4 years): $240
- 2021 (5 years): $190
- 2020 (6 years): $165
- 2019 (7 years): $155
- 2018 (8 years): $140
- 2017 (9 years): $125
- 2016 (10 years): $115
- 2015 or older (11+ years): $100
For older, lower-priced vehicles these amounts are far friendlier than 6.25%. A six-year-old car sold for $10,000 costs $165 in tax rather than the $625 or more you’d owe on the same price at a dealer.
Vehicles at $15,000 or More (Table B)
Once the price or fair market value reaches $15,000, the tax is set by price bracket:4Illinois Department of Revenue. RUT-5, 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
Even at the top tiers, the effective rate stays below 6.25%. A $40,000 private sale generates $1,600 in tax (4%), compared with $2,500 or more at a dealer before local taxes are added.
Gifts, Even Trades, and Fair Market Value
When no meaningful price changes hands, whether that’s a gift, an even trade, or a token dollar amount, the tax is based on the vehicle’s fair market value.5Illinois Department of Revenue. RUT-50, Instructions for Private Party Vehicle Use Tax Transaction Return Writing “$1” on the form to avoid tax doesn’t work, and reporting a false price is treated as fraud. The state can reassess tax on the true value and add penalties on top.
Trade-in credits also don’t apply to private party transactions. If you and another person swap cars, each transfer is taxed on the full value or purchase price of the vehicle received.2Illinois Department of Revenue. Vehicle Tax FAQs
How Leases Are Taxed
Illinois places lease tax on the leasing company, not directly on you as the lessee.6Illinois Department of Revenue. ST-9-LSE, A Guide for Reporting Sales Using Form ST-556-LSE Your lease contract almost certainly makes you reimburse that cost, so the money still comes out of your pocket, but the calculation isn’t a straight percentage of the sticker price.
For most passenger vehicle leases running longer than one year, the taxable selling price equals the amount due at signing plus the total of all scheduled lease payments over the term. That total is usually well below the vehicle’s sticker price, because lease payments only cover depreciation and finance charges during the lease. Short-term leases (under one year) don’t qualify, and are instead taxed on what the leasing company paid for the vehicle, minus any trade-in credit. The dealer reports lease tax on Form ST-556-LSE at the time of the transaction.
Buying a Vehicle Out of State
Purchasing a car in another state and bringing it to Illinois doesn’t get you out of Illinois tax. You owe Illinois use tax when you register the vehicle, but Illinois credits you for sales tax already paid elsewhere. Pay 5% in Indiana on a $30,000 car ($1,500), and if your Illinois combined rate is 8%, you owe Illinois the 3% difference, or $900. If the other state’s rate matches or exceeds Illinois, you owe nothing extra.
Some out-of-state dealers collect Illinois tax for you, but many don’t. Hold on to the purchase receipt and any proof of tax paid. You’ll need both documents when you title and register the vehicle at the Secretary of State’s office.
Exemptions
Family Transfers
A vehicle transferred between immediate family members is taxed at a flat $15. Qualifying relationships are limited to spouse, parent, brother, sister, or child, including adopted children, and civil union spouses.5Illinois Department of Revenue. RUT-50, Instructions for Private Party Vehicle Use Tax Transaction Return Step-relations, in-laws, and grandparents don’t qualify. You still file Form RUT-50, mark the family exception, and enter $15 as the tax due.
Nonresident Buyers
Nonresidents buying from an Illinois dealer may qualify for an exemption. The dealer has to obtain a signed Form ST-588 certifying your eligibility, and you can’t use the vehicle in Illinois for more than 30 days in a calendar year.7Illinois Department of Revenue. ST-588, Nonresidency Exemption Certification for Sales and Leases of Motor Vehicles and Trailers Move to Illinois or exceed the 30-day threshold later, and you become liable for the tax plus penalties and interest.
Nonprofits and Government Entities
Qualifying charitable, religious, and educational organizations, along with government bodies, are generally exempt. The organization has to apply to the Illinois Department of Revenue for an exemption identification number before claiming the exemption.
Title, Registration, and EV Fees
Sales tax is only part of the bill. The Secretary of State charges $165 for an original vehicle title.8Illinois Secretary of State. Fees Annual registration for a standard passenger car runs $151: the $148 base fee, a $1 State Police Vehicle Fund surcharge, and a $2 Park and Conservation Fund surcharge.9Illinois General Assembly. Illinois Code 625 ILCS 5/3-806
Fully electric vehicles carry an additional annual surcharge that offsets motor fuel tax revenue the state doesn’t collect from EVs. The surcharge has been $100 per year, though the amount has been subject to proposed legislative changes. Confirm the current figure with the Secretary of State before budgeting for an EV.
Deadlines and Penalties
Form RUT-50 and any tax owed on a private party purchase are due within 30 days of acquiring the vehicle.5Illinois Department of Revenue. RUT-50, Instructions for Private Party Vehicle Use Tax Transaction Return Miss it and you owe a 5% late filing penalty plus interest that keeps accruing until you pay.10Legal Information Institute. Illinois Admin Code Title 86 700.300 – Penalty for Late Filing or Failure The 30-day clock starts from the purchase date if you bought the vehicle in Illinois, or from the date you brought it into the state if you bought it elsewhere.
Understating the purchase price is a far more serious problem. If the state decides the reported price was below fair market value, it can reassess the tax on the actual value and add penalties. Reporting a false price on a tax form is fraud, and the consequences can dwarf whatever you were trying to save.
Who Files What
For dealership purchases, the dealer handles the paperwork. It collects the sales tax at signing, files Form ST-556 with the Illinois Department of Revenue, and submits the title paperwork on your behalf.11Illinois Department of Revenue. Illinois Tax Requirements for Cars, Trucks, Vans, Motorcycles, ATVs, Trailers, and Mobile Homes You don’t do anything separately.
For private party purchases, it’s on you. Fill out Form RUT-50 and submit it along with your tax payment and title and registration application to the Secretary of State, either by mail or in person at a facility.3Illinois Department of Revenue. Private Party Vehicle Use Tax The form, the tax payment, the $165 title fee, and the registration fee are all due together inside the 30-day window.