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Buying a car in Illinois will cost hundreds more next month

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PEORIA (WEEK) -- A cocktail of laws collectively known as Rebuild Illinois will soon raise the out-the-door price for car buyers by hundreds of dollars.

Rebuild Illinois is Gov. JB Pritzker's (D, Illinois) $45 billion capital plan. He says that money will be spent improving state roads and buildings. To pay for it, several taxes and fees were increased.

What's changing

  • Gas Tax: The gas tax was doubled from $0.19 per gallon to $0.38 per gallon. This took effect in July 2019.
  • Title Fee: This jumped from $95 to $150, also in July 2019.
  • Car registration: Registering your car is going from $101 to $151 January 1, 2020.
  • Dealer documentation fee: Bouncing from $174.94 to $300 on January 1, 2020. The Secretary of State sets the limit for this fee every year.
  • Trade-In Sales Tax Cap: Starting January 1, 2020, only the first $10,000 in trade-in value will be used as a tax credit.

    Currently, sales tax is paid based on this formula:
    (Price of purchased car) - (old car's trade in value) = taxable total

    But next month, it will be calculated this way if your trade-in is worth more than $10,000:
    (Price of purchased car) - $10,000 = taxable total

    If your trade-in is valued at less than $10,000, you would still use the original formula. The state sales tax on vehicles is 6.25% but local taxes are added as well.

How it adds up

So, if you were buying a $35,000 car and getting $15,000 for a trade-in, it will cost you an extra $500 in taxes and fees if you wait until next year:

  • December 31, 2019
    $35,000 (new car price) - $15,000 (trade-in credit) = $20,000 (taxable total)

    6.25% sales tax of $20,000 = $1,300
    $176 dealer fee
    $175 title and plate transfer
    $101 registration
  • Jan 1, 2020
    $35,000 (new car price) - $10,000 (trade-in credit) = $25,000 (taxable total)

    6.25% sales tax of $25,000 = $1,625
    $300 dealer fee
    $175 title and plate transfer
    $151 registration

Not all of the increases came from lawmakers. The Illinois Automobile Dealers Association lobbied to increase the dealer fee, according to their website. "The Doc Fee increase will help to reimburse dealers for the ever-expanding list of State and federal mandates related to the sale of motor vehicles," it says.

Car dealerships are trying to get customers in the door before those extra fees kick in. Mike Miller Auto has sent flyers home to potential customers.

Christopher Wood, BMW Peoria's sales manager, sympathizes with such a dramatic difference in price. "If you're a working person like me that's a car payment," he said.

Bobby Oler @bobbyoler

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