A little discussed provision of the State’s Capital Construction Funding legislation passed on the final days of Spring Session included language which will cap the tax credit for a motor-vehicle trade-in at $10,000, beginning January 1, 2020.
Current law provides a tax credit equal to the full value of any property that is traded-in to a retailer selling property “of like kind and character”. Under this change in the law, a customer who trades in a vehicle at over $10,000 will not receive the tax credit for the portion in excess of $10,000. The current trade-in credit ensures that a consumer only pays tax on the portion of the vehicle they utilized. Removing this credit, as was done by the legislature this Spring, ensures a consumer pays tax when he or she purchases the vehicle and again when they sell it. According to the Illinois Automobile Dealers Association, this double taxation increases the costs for purchase of both new and used vehicles and will have negative effects on Illinois’ economy.
Rep. Tony McCombie joined Rep. Ryan Spain in co-sponsoring his legislation, House Bill 3891, to repeal this change in law set to take effect January 1, 2020 and prevent this double taxation.