Happy 2015, Illinoisans - Finally, a Fair Tax on Auto Leasing - DHS Money Matters

Happy 2015, Illinoisans - Finally, a Fair Tax on Auto Leasing - DHS Money Matters

DID YOU KNOW: that up until this year, Illinois consumers who leased new automobiles have been paying use tax on the full price value of any leased motor vehicle, less trade value;

NEW PUBLIC ACT: 098-0628 effective as of January 1st, 2015, amends the Illinois Use Tax Act, Chapter 35 ILCS 105/2;

APPLIES TO: any First Division and certain Second Division motor vehicles, as defined by Chapter 625 ILCS 5/1-146, leased for more than one year, on or after July 1st, 2014;

TAXABLE SELLING PRICE:  the consideration received by the leasing dealer pursuant to the lease agreement, including the amounts due at lease signing, all monthly and other regular payments due over the lease term. The selling price Shall No Longer be reduced by the value of any trade-in of tangible personal property;

USE TAX RATE: according to Illinois Use Tax Rate Finder  State Rate of 6.25% and Regional Transportation Authority Rate of 1% (total 7.25%) for vehicle lease transactions for lessee domiciled in Chicago, Cook County, Illinois. (FYI: state and local sales tax for a new motor vehicle purchase by a Chicago resident is 8.25%.)

TO BE COLLECTED BY: Leasing dealer for the Illinois Department of Revenue. They prepare and submit all the paperwork as part of the capped document prep fees.

HOW MUCH SAVINGS? According to the Chicago Automobile Trade Association (CATA), the following would be typical Use Tax savings on Illinois new vehicle leases:

- $27,000 selling price, 36 month lease, no down payment: @ $945 Use Tax, saving about $945;

- $60,000 selling price, 24 month lease, no down payment: @ $1470 Use Tax, saving about $2730

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