Statehouse
12:56 pm
Mon November 4, 2013

Car Dealers Push To Change Leasing Tax

Credit Flickr user oldbrochures

The price of leasing a car in Illinois could be lowered under a proposal before the Illinois General Assembly. Automobile dealers say leasing in Illinois has lagged behind other states.

If you were to lease a car today, chances are you'd be charged for tax on the full value of the vehicle, just like if you were buying it.

But it's the leasing company that actually pays taxes, and — due to how the system's set up in Illinois — it's likely they only pay a fraction of what they've collected to the state.

Proposed legislation, backed by auto dealers, would change it so customers only pay tax on their monthly payments, not the full cost of the car.

The Illinois Department of Revenue supports the change. Spokeswoman Sue Hofer says Illinois won't lose any tax revenue. "This way we know the person who drives that car off the lot isn't going to end up paying more sales tax to the person he or she bought it from than that person pays to the state of Illinois," Hofer says.

Dealers say leasing amounts to just 10 percent of auto transactions in Illinois, compared to 25 percent elsewhere.

They say on a lease of a car worth $32,000, the change could lower payments by $60 a month.