All 50 states have some form of sales or use tax -- that is, some type of tax on a wide variety of products and services you purchase. Many states have a straight sales tax of around 4 to 7 percent that applies to all purchases except for exempt items such as staple foods and prescription drugs. Other states, such as Illinois, have more complex hybrid taxation systems in which the state charges sales tax on some items and use taxes on others, with many exemptions for both.
Purchasing a Used Car From a Dealer in Illinois
New and used vehicle dealers in Illinois are required to charge a vehicle use tax on most vehicle sales. The vehicle use tax is the same rate as the sales tax. Most counties in Illinois have a 6.5 percent sales tax rate, but Cook, DuPage, Kane, Lake, McHenry, Will, St. Clair and Madison counties have different sales tax rates. See Form RUT-25 for the appropriate rate if the address for the title or registration is in one of these counties. The vehicle use tax must be paid within 30 days and must be paid when you apply for a title or registration.
Purchasing a Used Car From a Private Party in Illinois
Individuals in Illinois must pay a vehicle tax when they purchase a vehicle or accept a vehicle as a gift from another private individual. The amount of tax due depends on the value of the vehicle and ranges from as little as $25 for an older low-value car to $1,500 for a car worth $30,000 or more. This tax is payable when you apply for a title and register the car in Illinois. You must pay this vehicle tax if you receive a car as a gift or inheritance, although there are exemptions for inheritance from a spouse as well as a number of other exemptions, including for cars donated to charitable organizations.
Illinois Department of Revenue Form RUT-25
Form RUT-25 is the form that must be filed by the dealer that sold a new or used vehicle. The form lists the cost of the vehicle, the names and addresses of seller and buyer, tax paid or reason for exemption from vehicle use tax. The dealer pays both the vehicle tax due and the title and registration fees when he submits Form RUT-25 to the Illinois Secretary of State's office, which forwards the tax portion to the Department of Revenue.
Illinois Department of Revenue Form RUT-50
Form RUT-50 is the form that must be filed by the buyer of a used vehicle from a private individual or by the recipient of a vehicle as a gift. Like Form RUT-25, Form RUT-50 lists the details of the transaction, including contact information, amount of tax paid or reason for exemption from the tax. Table A and Table B break down the tax due based on the value and/or age of the vehicle. The buyer should include both the vehicle tax due and the title and registration fees when he submits Form RUT-50 to the Illinois Secretary of State's office.
Clayton Browne has been writing professionally since 1994. He has written and edited everything from science fiction to semiconductor patents to dissertations in linguistics, having worked for Holt, Rinehart & Winston, Steck-Vaughn and The Psychological Corp. Browne has a Master of Science in linguistic anthropology from the University of Wisconsin-Milwaukee.