The Illinois tax on a car purchase depends on who is selling. Buy from a licensed dealer and you pay a percentage-based sales tax that starts at 6.25% and climbs with local add-ons. Buy from a private party and you pay a flat-dollar use tax pulled from a state chart, based on the car’s price or age. Both paths also carry fixed title and registration fees to the Secretary of State, so two people buying identical cars can walk away owing very different amounts.
Buying From a Dealer
Illinois collects a 6.25% Retailers’ Occupation Tax on the purchase price at a dealer. The state keeps 5% and returns 1.25% to local governments.1Illinois Department of Revenue. Use Tax Rates That 6.25% is the floor. County, municipal, and special-district taxes stack on top.
Several local layers can apply. A registration address inside Chicago city limits owes an additional 1.25% home-rule use tax. Addresses in the collar counties (DuPage, Kane, Lake, McHenry, and Will) trigger a 0.75% Regional Transportation Authority use tax. Cook County addresses outside Chicago add a 1% county use tax. Parts of Madison and St. Clair counties carry a 0.5% transit-district tax. Combined rates in the highest-tax municipalities can exceed 10%.
The rate that matters is the one at your registration address, not the dealership’s location. The Illinois Department of Revenue’s MyTax Illinois rate-finder returns the exact combined rate for any address in the state.1Illinois Department of Revenue. Use Tax Rates Check it before you sign. Two percentage points on a $35,000 car is $700.
Trade-In Credit
Trading in a vehicle at a dealer reduces the amount subject to tax. You pay sales tax only on the difference between the new vehicle’s price and the trade-in credit.2Illinois General Assembly. 86 Ill. Adm. Code 130.455 – Motor Vehicle Leasing and Trade-In Allowances The trade-in must be another vehicle, but it does not have to be the same type or value.
Buy a $40,000 truck and trade in a car worth $15,000, and you owe tax on $25,000. At a combined 8% rate, that cuts your bill from $3,200 to $2,000. Illinois briefly capped the trade-in credit at $10,000 between 2020 and 2022, but that cap has expired and the full trade-in value applies again.2Illinois General Assembly. 86 Ill. Adm. Code 130.455 – Motor Vehicle Leasing and Trade-In Allowances
The credit is based on the value the dealer assigns to your trade-in, regardless of any outstanding loan. If you owe $5,000 on a trade-in the dealer values at $12,000, the full $12,000 still reduces your taxable purchase price.
Dealer Documentary Fee
Dealers can charge a separate documentary fee for processing paperwork. Illinois law caps it at $300.3Illinois Attorney General. Buying a New Vehicle Some dealers charge less. Many charge the full amount. It is a negotiable line item, and knowing the legal ceiling helps.
Buying From a Private Party
A purchase from another person triggers the Private Party Vehicle Use Tax instead of sales tax. This tax uses flat-dollar amounts from a chart rather than a percentage. The math is simpler, but the system has quirks.
The tax is based on the purchase price or fair market value, whichever is higher. Buy a car worth $12,000 for $8,000 and the state taxes it at the $12,000 fair market value. You can get a fair market value estimate from any licensed dealer, and attaching a copy of the bill of sale to your paperwork can help prevent the state from questioning your reported price later.4Illinois Department of Revenue. RUT-50 Instructions for Private Party Vehicle Use Tax Transaction Return
Vehicles Under $15,000 (Table A)
If the price or fair market value is under $15,000, the tax is a flat amount based only on the vehicle’s age. Age is calculated by subtracting the model year from the year you apply for the title. The 2026 schedule:5Illinois Department of Revenue. RUT-5, 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
A $14,500 car and a $6,000 car of the same age owe the same tax. For older, cheaper vehicles, the flat fee can work out to a higher effective rate than you would pay at a dealer.
Vehicles at $15,000 or More (Table B)
Once the price or fair market value reaches $15,000, the tax switches to price brackets:5Illinois 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
These flat amounts tend to run lower than the percentage-based tax at a dealer. A $35,000 private-party purchase owes $1,600 in use tax. The same car at a dealer in a municipality with an 8% combined rate would cost $2,800. The gap widens on expensive vehicles. A $90,000 car from a private seller owes only $2,600.
Family Transfers
Certain transfers qualify for a reduced tax. A vehicle sold or gifted between immediate family members (spouse, parent, child including adopted children, brother, or sister) owes just $15 instead of the normal amount.4Illinois Department of Revenue. RUT-50 Instructions for Private Party Vehicle Use Tax Transaction Return Civil union partners count as spouses. Step-relations, in-laws, and grandparent-to-grandchild transfers do not qualify.
No trade-in credit exists for private party sales. Selling your old car to a third party and using the proceeds for a new one does nothing to reduce the tax. The full price or fair market value determines what you owe.
Buying Out of State
Bringing a vehicle to Illinois from an out-of-state dealer, you owe Illinois use tax at the combined rate for your home address. Illinois gives a dollar-for-dollar credit for sales tax already paid to the other state, so you owe only the difference.1Illinois Department of Revenue. Use Tax Rates
Say you paid 5% sales tax in Indiana on a $30,000 vehicle ($1,500) and your Illinois combined rate is 8.25%. Your Illinois use tax liability is 3.25% of $30,000, or $975. If the other state’s rate equaled or exceeded your Illinois rate, you owe no additional tax. Either way, the standard Illinois title and registration fees still apply.
Title and Registration Fees
Every vehicle purchase in Illinois carries fixed fees to the Secretary of State. These are the same whether you buy from a dealer or a private seller.
- Original title: $165
- Annual registration (passenger vehicle): $151
- Plate transfer: $25
That puts the baseline fixed cost at $316, or $341 with a plate transfer.6Illinois Secretary of State. Fees Electric vehicles pay an additional annual registration surcharge on top of the standard $151, since they do not contribute to road maintenance through gas taxes. Check the Secretary of State’s current schedule for the surcharge amount.
Paying the Tax
How you pay depends on who sold you the car.
Dealer Purchases
The dealer handles it. You pay the full sales tax and Secretary of State fees at the point of sale, and the dealer files the title application and Form ST-556 with the state.7Illinois Department of Revenue. ST-556 Instructions Plates or temporary registration arrive without additional steps on your end.
Private Party Purchases
The paperwork falls entirely on you. Complete Form RUT-50, calculate the correct use tax using the RUT-5 chart, and submit the form, the title application, and payment for both the tax and Secretary of State fees within 30 days of the purchase date.4Illinois Department of Revenue. RUT-50 Instructions for Private Party Vehicle Use Tax Transaction Return Everything goes to the Secretary of State’s Vehicle Services Department in Springfield, which forwards the tax portion to the Department of Revenue.
Missing the 30-day deadline triggers a late-filing penalty, a separate late-payment penalty, and potentially a collection fee if you ignore a later bill.
Underreporting the Price
Writing a lower price on the bill of sale to reduce tax is fraud. The Department of Revenue compares reported prices against fair market value databases, and when the numbers do not match, the state assesses tax on the actual market value plus penalties.
Claiming a purchase was a “gift” when money changed hands is treated the same way. Genuine gifts between non-family members still owe standard use tax based on fair market value. Only transfers between the qualifying immediate family members listed on the RUT-50 form get the reduced $15 rate.4Illinois Department of Revenue. RUT-50 Instructions for Private Party Vehicle Use Tax Transaction Return
Federal Deduction
If you itemize on your federal return, the sales tax you pay on a vehicle purchase may be deductible. You can elect to deduct state and local sales taxes instead of state income taxes on Schedule A, and the sales tax paid on a motor vehicle counts as part of that general sales tax deduction.8Internal Revenue Service. Instructions for Schedule A (Form 1040) If the vehicle sales tax rate was higher than the state’s general sales tax rate, you can only deduct the amount you would have paid at the general rate. Filers who take the standard deduction get no benefit.
For electric vehicles, the federal New Clean Vehicle Credit and Previously-Owned Clean Vehicle Credit are not available for vehicles acquired after September 30, 2025.9Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After Unless Congress enacts new incentives, no federal tax credit offsets the purchase price of an EV bought in 2026.