Lesson Learned from Taxes

[PrinzII]

Someone once said that there are two certainties in life - Death and Taxes. Even when you make a purchase on a new vehicle, taxes come into the picture quite heavily.

For instance if you are an IL resident living in the City of Chicago, you are liable to pay two taxes. The first tax is the IL Use Tax which can be based on vehicular value or sale price. If the car costs $21,600, it's going to be $1,000 - $1,250 in use tax. Then you have to pay the City a tax of 6% of the purchase price. In the example, it's going to run you $1296. So, in total you are shelling out $24,000+ including taxes. I also didn't get into other associated fees such as title and licensing.

I guess the message I am trying to convey is that one should do research on this before buying that car out of state so they know what they are in for from their home state/county/municipality as far as taxes are concerned.

[Dave N]

Is the "use tax" one of Blago's new state fees? I'm sure I didn't pay this when I bought my truck a couple of years back. I don't know about Chicago, but most downstate cities give you a 1% break on vehicle tax. Even so, tax is still a very sizable chunk o' change!

[SickOfItAll]

I must be dyslexic, I read that as "lesson learned in Texas" and my first thought was that someone had pulled a gun on you on the freeway here

[TortoiseAWD]

Nebraska has some pretty insane taxes to get your car on the road, too . . . my WRX cost me $2100 the first time I licensed it (that's sales tax, property tax, and wheel tax all in one tidy bundle). Now it's settled down to a paltry $400/yr.

Tort

[Jinx1309]

SickOfItAll, Don't feel bad....I did the exact same thing. After I read the entire post I was trying to figure out how it related to Texas...then I relized it said taxes...lol

[PrinzII]

Originally posted by Dave N
Is the "use tax" one of Blago's new state fees? I'm sure I didn't pay this when I bought my truck a couple of years back. I don't know about Chicago, but most downstate cities give you a 1% break on vehicle tax. Even so, tax is still a very sizable chunk o' change!

Nope. The use tax has been around since God knows when. It's mentioned briefly in the Rules of the Road.

[DFTowel]

NY may be considered an expensive place with lots of taxes but when it comes to cars we are downright cheap! We pay the local sales tax (in my case 8.5%) and on some cars there might be a luxury tax surcharge. But that is it, we only pay that once. Nothing else except the annual registration fee which is around $35 I think plus another $35 for inspection.

[Konowl]

Trying living in Ontario, Canada, where you tack on 15% to a new vehicle!

[phareous]

In South Carolina its a $300 sales tax cap...then you also have to pay your yearly property taxes on the car too (which was somewhere around $600 on a $25,000 car)

[bretfraz]

What Prinz is talking about only exists in the City of Chicago (for all you IL residents). I experienced the same thing when I lived there.

I leased a new car in 1995 and had to pay 7% Cook County sales tax on the entire purchase price (most states and counties only charge you sales tax on the depreciated amount of your lease). Plus I had to pay an additional 6% city tax on the depreciated amount which applied to leased cars only. Sounds like the city changed the tax law to include ALL new car purchases. If I had been living outside the city I would not have paid the 6% tax.

Illinois is one of the worst tax states for auto leasing. The combo of leasing, IL taxes and Chicago city taxes have to make it the worst place in the nation for leasing a new car.

[PrinzII]

Originally posted by bretfraz
What Prinz is talking about only exists in the City of Chicago (for all you IL residents). I experienced the same thing when I lived there.

I leased a new car in 1995 and had to pay 7% Cook County sales tax on the entire purchase price (most states and counties only charge you sales tax on the depreciated amount of your lease). Plus I had to pay an additional 6% city tax on the depreciated amount which applied to leased cars only. Sounds like the city changed the tax law to include ALL new car purchases. If I had been living outside the city I would not have paid the 6% tax.

Illinois is one of the worst tax states for auto leasing. The combo of leasing, IL taxes and Chicago city taxes have to make it the worst place in the nation for leasing a new car.

I have to agree with bret on this. Everyone complains about MA and other states but IL is VERY tax-happy. This use tax thing is one of many taxes in IL that will drive you up a tree. Then if you live in Chicago, you get wailed with more taxes.

Years ago, residents would go out to the suburbs to buy a car. The mayor of Chciago decided to put a halt to that by doing the following:

a) Forcing suburban dealers to charge Chicago residents the same sales tax as if they were in the city (Currently 8.75%)

b) If the dealer did not assess the correct tax, you got a bill in the mail for the difference.

When I got my '77 Cutlass, I had (b) happen to me. They sent me a bill for the difference in taxes. With the '02 Max, I had (a) happen to me. I bought the Max at a Suburban dealership and they assessed the City Sales Tax.

The impetus behind this thread is that I am currently doing a little shopping for an '03 SE Titanium Editiopn and one of the '03s is a Polished Titanium like Fuel's but the car is in CT. The other '03 is dust magnet Super Black and is in IL. Both have leather, Meridian Package (includes heated seats, heated steering wheel, side air bags...in short loaded sans Navigation). Both vehicles have black interior but the one in CT is $21,600 and the one in IL is $23,995.

BTW, the guy in CT was and when I told him about the taxes here.

[PrinzII]

Update: I am trying to talk to the one in IL to see if he will object to selling the car for $21,600. Also, I am trying to figure out the exact tax damage if I decide to do the one in CT.