New Illinois Law Removes Trade-In Tax Credit Cap
Thanks to a new law effective Jan. 1, 2022, retail vehicle buyers now receive the full tax credit on trade-ins. This new provision, part of Senate Bill 58 that was supported by both the Chicago Automobile Trade Association (CATA) and Illinois Automotive Dealers Association, reverses the $10,000 cap that was set in 2020 as part of Gov. Pritzker’s Rebuild Illinois capital infrastructure plan.
“This change provides additional motivation for vehicle owners to trade-in their vehicles at a time when trade-in values are at an all-time high,” said Kevin Keefe, CATA chairman. “Prior to this change, vehicle buyers had been losing much of the tax savings that makes trading in a vehicle advantageous. Now, consumers who are looking to get a retail vehicle can maximize their savings.”
When shopping for a vehicle, the tax savings created by a trade-in can be significant. For example, the tax credit on a trade in worth $20,000 can be as high as $2,000, depending on location. In this case, a vehicle buyers would be saving $1,000 compared to the savings with the capped trade-in credit.
“New-vehicle shoppers face an unprecedented array of challenges in today’s supply-limited market,” said Dave Sloan, CATA president. “The removal of this trade-in tax credit cap helps buyers at a time when they need it most.”
Buyers shopping for a vehicle don’t need to do anything. New-car dealers will automatically add in the trade-in credit at the time of purchase. DriveChicago.com, which lists the inventory of more than 400 new-car dealers in the Chicago market, is an ideal place to find a new-car dealer and begin your search for a new vehicle.
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